Euro took a major hit in early Europe on the Asian central bank news as traders took profits on the recent rally and ahead of the ECB meeting tonight. Further losses were limited however as the Euro managed to gain against other riskier currencies. Of concern is recent reports of funding crisis in eastern Europe. Sterling dropped hard in the face of better than expected economic data with profit taking in full control. The sharp drop also coincide with a recommendation from Goldman Sachs to exit long cable trades as the 1.6500 level objective has been reached. GBP/JPY was also rejected the 160 Yen level. Looking ahead BOE rate Announcement.
Technical Outlook:
EURO chart pattern is expected to be on a sideways to bearish note for the day. Currency is expected to trade in the range of 1.4050-1.4300 levels. Daily Momentum and stochastic are seen trending down and Euro is trading above the moving average hinting that long term bull trend remains intact. Good support is seen at 1.4020 break of which will see 1.3980 and key resistance is seen at1.4330 levels .
GBP chart pattern is expected to trade in the range of 1.6120-1.6430 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards the possibility of downside correction to 1.6080 levels .Key resistance for the currency is seen at 1.6530 levels.
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