All eyes were on the ECB press conference yesterday to see what Mario Draghi had to say and it was during the Q&A that he indicated measures could be taken in June. If they start cutting rates, that will obviously have an impact on the Euro and we witnessed selling on this assumption.
The Euro/Dollar posted a key reversal day where price opens, makes a new high but then closes below the low of the previous day. This is seen as a bearish signal so what is the likely impact of this?
Looking at the chart, we can see a rising trend line which should be tested in the near future. This trend line started of the July lows of last year and although it could create a nice bounce, I suspect that ultimately it will break to the downside.
A viable target on a break would be the daily 200ma which currently sits around 1.36 so there’s plenty of room should this scenario play out. As a lower probability scenario, should we see price break above the high of yesterday, all bets of downside moves are off and the Euro would have plenty of scope to run well above 1.40.
Charlie Burton
EzeeTrader
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