EUR: Guided by ECB expectations – BBH

The ECB meeting on October 26 is the next key policy focus as far as EUR is concerned, according to analysts at BBH.  

Key Quotes

“The ECB is expected to reduce the amount of asset is buys starting next year.   While officials may try to facilitate a dovish interpretation of its tapering, it is not clear that they will succeed.  The speculative participants, judging from the positioning in the futures market, remains favorably disposed to the single currency.  The net long speculative position was the largest in six years as of October 10.”

“The euro recorded a bullish hammer candlestick bottom pattern after the employment data, and a week later, it appears to have formed a shooting star candlestick pattern top.  The euro tried three times to push above the $1.1880 area which corresponds to a 50% retracement objective the drop that began on September 8.  We would be inclined to be short until that area is penetrated.   A move above $1.1880 now could signal a move to $1.1930.   When the euro has poked through $1.20, it does appear that some official (unnamed sources) seem to talk it down. On the downside, the $1.1750-$1.1775 area offers support.”