There was nothing to gain for traders of the EUR/USD and GBP/USD on Monday. Both major currency pairs were little changed with larger price fluctuations being absent. The euro fell to a low of 1.1725 before reversing its losses towards 1.18. In sum, trading the EUR/USD lately did not serve us well since larger price movements and breakouts are still lacking. However, this unprofitable trading phase could soon be over as the ECB meeting looms ahead. The ECB policy announcement is expected to bring clarity on the fate of the ECB’s asset purchase program but until then the euro may continue its sideways movement between 1.1850 and 1.17.
EUR/USD: If the pair breaks above 1.1790 it faces the next hurdle at 1.18 but given prepositioning ahead of the ECB meeting, it may trend higher, heading for a test of 1.1850/60. A current support is however seen at 1.1720.
The German Manufacturing PMI is scheduled for release at 7:30 UTC but this report is unlikely to have a major impact on the price action in the euro.
GBP/USD: Recent price action in the cable indicates that a bullish breakout may be imminent. We see prices formatting an inverted head-shoulders pattern after failing to break the 1.31-support significantly. We now prepare for upcoming bullish momentum driving the cable towards 1.33 and possibly 1.3370.
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