Once again the market has given us the biggest clue over potential future price moves in the euro. By and large we’ve stabilised after the big fall from 1.3993 pulled up at 1.2500. The market is short and the fact we haven’t gone lower says that shorts have found their comfort level where they don’t want to overextend themselves by pushing it lower.
The two ECB headlines have shown us something important though. There is a willingness to drive the euro lower but it now needs a real reason to do so. The sellers now need something concrete before they jump in again rather than selling on the sentiment and expectation that got us this far.
To me that reinforces the potentially strong short term bottom and we will need a big headline or action to break it.
We can be caught up in the “where now?” after a big move and it’s these little clues that help us make that decision. There’s plenty of other things in the mix too but from the euro side the market has has shown it’s hand. Today’s moves should have given some encouragement to buyers and will add further strength to the bigger support levels below.
