I thought I did well getting out of my week long EUR/GBP shorts at 0.8250 over Carney until Benoit Coeure decided to slap negatives rates right back on the table. Once again an ECB member has managed to knock the stuffing out of the bulls.
We’re back below the August support line and the series of lower lows since Jan suggests that the 1.38 highs have seen their day for now and that maybe a look further down is warranted.
EUR/USD daily chart
Given the recent inflation numbers it’s going to be fairly hard for the euro to shake theses comments off — in one hit the positivity from Draghi’s ECB speech has been wiped out. Job done if they wanted a weaker euro.
As I mentioned, EUR/GBP has hit the skids under 0.83 and once again we’re heading to the Feb 2013 support line.
EUR/GBP daily chart
At today’s money that line comes in at 0.8207 and we also have a short term support line from the Jan lows at 0.8210. The 61.8 fib at 0.8160 is still intact if only by a few pips and so still remains a level to look out for.
A long was profitable from these areas previously so I may chance my arm once again with a long at 0.8210 adding ahead of the 61.8 fib with a stop just under. My only concern is the GDP number out on Friday and whether the market is now going to be looking for these negative rates.
