EURUSD - Rethink after yesterday's surprise cut

Yesterdays surprise rate cut from the ECB to a record 0.25% caught a fair few out, shown with a viscous sell off immediately after the announcement, but did it manage to recover later in the day to settle back above the 1.3400 mark.

We have convincingly broken out of the trend channel but now seeing some support from the 100day SMA and 38.2% Fibb retracement level / previous high at 1.3420 level.  Given the combination of these, this could prove to be a strong support so needs to be watched closely.

EURUSD - Under pressure

Its been a heavy week for the Euro after an very impressive recent run.  After lower than expected inflation data released earlier this week, it has promoted people's view that the ECB could be about to loosen their monetary policy and cut interest rates next week in their meeting on the 7th November, in order to stimulate the eurozone growth.

'Fiscal cliff' is a dirty word once again

The fiscal cliff is rearing its ugly head once again as the Obama administration has warned that the current debt cap could be reached by mid-October, rather than the mid-November originally forecast.  The markets could be in for a bumpy road ahead, or the next couple of months at least, as we'll most likely watch the Democrats vs Republicans play chicken with the US economy once again!

If we looked back how the markets reacted in the run-up to the past votes both in 2011 & 2013 we might have an idea of how people might react in the run-up to the event, as well as looking at what happened straight afterwards.

EURUSD - back to watching the 1.3300 level again!!!

The EURUSD is a bit more interesting today.  It reached its target on Thursday 1.3400 exactly, and then rejecting it almost immediately trading back down to 1.3300 today.  We're back to watching that level again, a close above or below could indicate which direction it will head tomorrow.  We've got divergence on Momentum indicator once again (highlighted in light blue lines).  Keep an eye out of the MACD, as we could be in for a cross down if we start printing lower numbers.

EURUSD - Triangle is still forming!

The EURUSD continues to form a symmetrical triangle, with people sitting on the sidelines to see where we will go next, as we continue to gravitate towards 38.2% level.  The Fibb study works well as both the 38.2% and 50% retracements hold nicely generating quite a bit of activity at these levels so this is definitely worth bearing in mind moving forward.