I was stopped out of EUR/USD last night as this nasty triangle lives on. The B wave low slid all the way down to the .786 retracement at 1.2604 before bouncing back in what I believe to be C up. But EUR/USD is facing significant headwinds from crude oil on the lows, an extremely weak GBP/USD, and the S&P struggling at 870 resistance. Should EUR/USD get the pop through 1.2700, don't get too comfortable with any long positions, because we are scheduled to finish this bloody monthly long consolidation in the next few sessions somewhere around 1.2900. What does the market have in store for us that could provide enough guidance to free us from range-dom?

How about interest rate announcements from the European Central Bank and Bank of England early tomorrow ET, and then a potential 400k jobless on Friday's NFP. The Bank of England is fully expected to cut 100 bps to bring interest rates down to 2.0%. The ECB is fully expected to go with a 50 bps cut, but if Trichet were to give us 75 bps, I believe you would see the Euro rally into our 1.2880 level on the outlook that the Europeans are finally being proactive with monetary policy to combat the current recession.

Unfortunately, while I was rambling on here, EUR/USD broke the 1.2680 level and is dealing 1.2710. I am long a piece of EUR/USD with stops at 1.2670, and will look to buy pullbacks towards 1.2690. Other than this light position, I am going to keep it tight to the vest while heading into the central bank announcements. Following the interest rate announcements, however, I will be aggressively eyeing shorts into 1.2900 for the hopeful end to this loooonnnnnngg consolidation. And unfortunately, I believe it will be a horrible job loss on Friday that catapults us from the this 27-day consolidation.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.