The market was bullish EUR/USD at 1.3950 pre-ECB and is now bearish 250 pips lower. The dovish statement shouldn’t have come as that much of a surprise and with any Fed taper now seemingly off the agenda, there is no diverging policies between the Fed and the ECB which would give me strong confidence in a EUR/USD trade.

On the other hand, the EUR crosses look shaky and one can make a strong case for being short pairs like EUR/AUD and EUR/CAD. Even EUR/JPY could be in for a bigger shake-out but that will be driven by positioning, not fundamentals.

In other words, (long CAD, NZD and AUD), (short USD and EUR), (buy GBP-dips bias), (sell JPY-rallies bias) and don’t trade the CHF. That just about sums up my view of the majors.

But, back to EUR/USD. 1.3700 is not the place to be getting bearish in my view and 1.3650/70 is looming as a critical support level. If this latter level breaks then I will turn bearish but I would not sell breaks while the USD is still struggling, preferring then to sell rallies.