- Firstly, recent history would suggest that we are much more likely to see range trading markets than any impulsive trends;
- Secondly, many of the same people turning bearish EUR/USD on the 1.36 handle were bullish at 1.3950 very recently;
- Thirdly, the change in tone from the ECB was not unexpected and in fact had been widely expected on the two previous meetings;
- Finally, technical support at 1.3650 held very well on the first test.
I think the most likely outcome for the EUR/USD is that we trade sideways just as we’ve done for the last year. Some of the crosses are likely to trade lower over time, particularly EUR/GBP, but these things seldom move in a straight line and I prefer to trade such a view through a ‘buy-cable-dips’ strategy.