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EUR Short Covering Elusive as More Talk of QE Inspires Bears

EUR Short Covering Elusive as More Talk of QE Inspires Bears

2014-11-26 12:10:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- EURUSD can't climb back into channel from Nov 7 low.

- EURGBP in lower half of triangle sub-0.7900.

- See the 'high' importance events on the DailyFX Economic Calendar.

Fundamental pressures are preventing key technical levels from being achieved by Euro bulls. ECB Vice President Vitor Constancio's latest remarks indicating that a sovereign QE program could be initiated in Q1'15 add another prominent voter to President Draghi's dovish camp, whose marching beat is 'the ECB balance sheet will expand to early-2012.'

Considering that the ECB's balance sheet is roughly €1 trillion short today of its early-2012 levels, market participants (those that have stuck around as illiquid holiday trading conditions set in) have determined that this is a strong enough signal to keep a Euro short covering rally at bay.

Whereas EURAUD is running higher on the back of a weaker Australian Dollar, the other major EUR-based pairs - EURGBP, EURJPY, and EURUSD - aren't offering as promising of a technical picture. See the above video for technical considerations..

Read more: USDOLLAR Yet to Reach 11370 Target; AUD/USD Breaches Triangle Support

--- Written by Christopher Vecchio, Currency Strategist

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

Follow him on Twitter at @CVecchioFX

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