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EUR/JPY, EUR/USD Bearish Key Reversals Begin Continuation Lower

EUR/JPY, EUR/USD Bearish Key Reversals Begin Continuation Lower

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- EURUSD key reversal seeing significant follow-through.

- EURJPY risks major breakdown below 139.85.

- EURAUD head & shoulders topping continues below 1.4650.

The problem with promising additional dovish action in June is that if the ECB does not do anything, it stands to lose a fair amount of credibility; the likelihood that the Euro would rally sharply in the wake of inaction once more is the most likely outcome in light of recent history.

Implicitly, the ECB now has no choice but to act. Germany's Bundesbank has compounded speculation today, suggesting that a downgrade to the 2016 inflation forecasts will result in a more lenient attitude towards additional easing steps. While President Draghi has previously declared that the Euro was not a policy tool, it is about to take the brunt of policy changes.

Watch the video for a more detail discussion on the ECB's dilemma, as well as trade setups for EURAUD, EURJPY and EURUSD.

Read more: Post-ECB Charts for EUR/JPY, EUR/USD Reveal Massive Topping Potential

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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