DailyFX.com -

Talking Points:

- EURUSD could rally near-term if it clears 1.3160.

- EURJPY inverse H&S valid above 138.02/05.

- Euro bears shouldn't expect QE from ECB this week.

EURUSD has fallen around -6% from its yearly high set in May, but a near-term reversal moment may be approaching for the 18-member currency with the ECB set to meet tomorrow. On the geopolitical front, headlines of a possible negotiated ceasefire in Eastern Ukraine is offering relief to instruments negatively impacted by the crisis - the Euro, the Russian Ruble, the German Dax, etc.

While reports have been conflicting over the state of a potential ceasefire, we have at least observed that the prospect of peace is a bullish catalyst for the Euro in the short-term. This may be adding tinder to the pile.

Earlier this week we discussed why traders shouldn't be anticipating a large scale, unprecedented easing program such as a Fed-styled QE from the ECB, which in light of recent economic data, may be setting the markets up for disappointment.

In any event, any potential forthcoming rallies in the EUR-complex will likely be considered short covering rallies rather than "the bottom" in my opinion, as the divergences between the Euro and the other major currencies are starting to grow from a fundamental perspective. It's worth noting that non-commercials/speculators currently hold 150.7K net-short contracts, the most since July 24, 2012 (155.1K contracts).

See the above video for technical considerations in EURJPY and EURUSD ahead of the European Central Bank's policy meeting tomorrow. I'll be covering the event live starting at 11:30 GMT in the DailyFX Live Trading Room.

Read more: USD/JPY Triangle, EUR/JPY Inverse H&S Point to Weaker Yen Soon

Related Articles
  1. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  2. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  3. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  4. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  5. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  6. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  7. Mutual Funds & ETFs

    ETF Fees: Why BlackRock is the Latest to Cut Them

    Low expense ratios are a big selling point for ETFs, but are they being focused on too much?
  8. Chart Advisor

    Is This The Beginning Of A Downtrend In Home Builders?

    Falling lumber prices and weakness on the charts of home builders suggest that the next leg of the trend could be downward.
  9. Investing

    The Semiconductor Sector is On the Verge of a Breakout

    The semiconductor sector may be on the verge of a major breakout that provides market leadership in 2016.
  10. Mutual Funds & ETFs

    Going Long China with Leveraged ETFs (YINN, YANG)

    Leveraged ETFs, especially those related to the China story, present significant opportunities and substantial risk. Here's how YINN and YANG add up.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center