All of the signals are pointing toward a lower EUR/USD but the most important one, market momentum, suggests that it will have trouble breaking lower onto a new plane.

Just before the ECB decision last week, EUR/USD was trading around 1.3600. We are still there! The news has certainly been bearish EUR which tells us that this market was already short and that it doesn’t have the appetite to start breaking new ground. I would be very wary of entering fresh shorts at these levels; if you’re bearish, either wait for confirmation via some fresh new lows or else be patient and wait to sell into short-covering rallies.

I remain bearish on the EUR crosses but with EUR/USD struggling to break lower, I’m looking for buy-dip opportunities in cable and AUD/USD, and/or rally-selling opportunities in USD/CAD.