From the FXWW Chatroom: Yesterday’s Draghi speech went exactly as expected, which is to say he didn’t deliver on any of the expectations to talk down the currency (speculation that was mostly fueled by what was mentioned in the ECB mtg minutes last week).
Now we expect markets to enter a “quiet before the storm” approach for the next 36 hrs or so before Jackson Hole really kicks off. The next two asia sessions may be quite dull. In EURUSD, we do prefer a higher convictions at these levels into the weekend. We think the technical picture bodes well for this 3-week consolidation to resolve itself higher. The obvious catalyst would be if Draghi unexpectedly comments on ECB’s adjustments to QE, but even if the speech brings nothing new, we still think a relief rally would be likely early next week. If one wants to take the USD/Yellen exposure out of the picture, EURGBP is still probably our favorite EURxxx at the moment..
R: 1.1850, 1.2000
S: 1.1726, 1.1660, 1.1562 (50 DMA)
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