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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - EUR/USD has been able to move marginally away from its 6-week low/ascending trendline over the course of the current trading week, following a big EUR long squeeze last week.

The focus is now on the ECB policy decision, with the latest talk - courtesy of MNI - saying that the European Central Bank won’t cut rates, citing a "senior eurosystem source.” Among the most relevant headlines, one could read: "Inflation slow but projections firmly anchored, Council unanimity on rates pretty difficult, Rates alone unlikely to slow Euro strength..."

What would be the consequences of the ECB not cutting rates on Thursday and failing to signal a cut next December? Jamie Coleman, US-Lead Editor at FXBeat, notes: "I think it is pretty obvious that we would get a sharp short-squeeze. But that would be the perfect opportunity to set fresh EUR/USD shorts, in my view." Coleman likes selling EUR/USD at 1.3650/1.3700.

According to Coleman, the ECB cannot and will not ignore deflationary pressures much further, saying "if the ECB wants to avoid opening the Pandora's box that is QE, they better cut conventional policy sooner rather than later."

Coleman sees it as inevitable at this stage, adding "the longer they wait, the less effective the cut will be; they are behind the disinflation curve and the market realizes that, if the ECB does not."

Another authority in the FX market, Adam Button, US-Lead Edior at Forexlive, also holds bearish views on the EUR going into the ECB meeting, mentioning the following factors as discouraging signs to support the currency.

According to Button, "the latest CFTC data (albeit a bit dated) shows speculators heavily long EUR meaning a further drop could lead to a squeeze; the MNI leak couldn’t spark a lasting bounce, German factory orders couldn’t lead to a lasting bounce, and a six-day decline ending Nov 1 has led to virtually no bounce."

The only little hope EUR bulls still have, in view of Button, is an ascending trendline having stalled the slides this week so far.
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