Following Monday’s breakout with a widespread up bar the trend continued yesterday with another up candle but it is interesting to note that the spread in the daily price was significantly lower than that of Monday suggesting that this particular rally may be lacking momentum and it will be interesting to see if the trend of narrowing spreads continues today.  If so we could see prices roll over in the short term and a repeat of the price action last seen in the middle of January, with a short term rally promptly followed by a fall.

Longer term I still believe the euro is overbought and that by the summer we could see the pair trading around the 81  region, as a longer term view of the chart is starting to reveal a series of lower highs and lower lows suggesting the start of a steady trend downwards and reinforcing the view that this is purely a short term breakout.

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