If you had a short position in the EURO heading into today's ECB press conference held by Trichet, you were rewarded after an initial shake. The mentioning of lessened inflationary risk and downside economic risk gave the EUR further reason to fall.
The EUR/USD fell below the 1.40 and further below this week's low at 1.3970, reaching almost 1.3940 before a pause to the reaction. IF the market can hold below 1.40 on a pullback, it is poised to look for lower support near 1.3850, with 1.39 also serving as an possible psychological support.
The EUR/GBP also fell, as the BoE did not mention QE3. With Trichet putting off interest rate hikes and noting lower inflation along with economic problems, the EUR/GBP continued a downward path it started at the end of August. The 0.8850-0.8860 support levels are in sight.
This Euro weakness is not showing through in the EUR/CHF. Although there was an initial bearish move, it remained relatively subtle compared to other Euro-crosses. In fact comparing the 5-min charts. EUR/CHF is the only one above the 200SMA, and is remaining so. Traders are afraid of jumping in front of the SNB bazooka.
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Fan Yang CMT
Chief Technical Strategist