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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

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