Forex Trading: EUR/GBP Testing Highs

Trichet’s comments, which were not as dovish as the market would like, has pushed the EUR/USD higher and has moved the EUR/GBP back toward the highs in the pair set yesterday (Monday) at 0.9798 (the high so far today has been 0.9797).

The trend remains bullish as 19 of 21 days (inclusive of today) have been up.  Over that period the rate has moved from 0.8234 to 0.9798.  A break of the 0.9800 level would be needed today to move higher but normally option trading may create a top until after the 10:00 AM NYT option expiration time.  We will see if the market has the momentum for a push.

Yesterday’s decline from the high looked like the pair was ready for a further correction. However, the end of year volatility along with weak handed shorts, suggests the top is too early to predict.  Nevertheless, the market will be looking for the opportunity where the charts point down for a correction.  It will probably need help from the EUR/USD (to the downside) however.  and so far the market does not seem ready to oblige.

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