Following the recent sideways consolidation in the 86.25 price area the euro to pounds pair has failed to hold at this level, with a consequent return to a heavily bearish picture once again.  Both Tuesday’s and Wednesday’s widespread down candles propelled the pair through the potential support at 0.86 and should we breach 0.84 then a re-test of support in the 0.78 to 0.80 seems increasingly likely.   This bearish picture is further confirmed by all four moving averages, particularly the 9 and 14 day which have both presented obstacles to any short term recovery.  In addition with the 40 day now diving below the 200 day average this is adding further to the negative picture and as a result any short term recovery should be seen as an opportunity to enter further short positions.  All of this, of course, is against the backdrop of the euro’s woes in Greece and the UK general election, either of which could effect or influence a dramatic change in market direction.  With the markets increasingly anxious of contagion into other European states such as Spain, Portugal and even Italy, we can expect to see continued market volatility until the situation is fully resolved.  Given the steep falls of late for the euro against several major currencies the single currency may be reaching an oversold position but with open interest still rising we do not appear to be at the turning point just yet.  For the $uros to poundsr this will probably occur in the 0.80 region in due course.

Other than the UK election the main item of $undamental newsthe pending interest rate decision from the ECB, with rates likely to remain on hold at 1%, and this announcement is unlikely to cause any noticeable reaction unless the accompanying press conference provides any shocks or surprises.

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