Yesterday’s price action on the euros to pound daily chart ended the day on a positive note and a wide spread up bar which closed the day marginally above the 14 day moving average but with a relatively deep shadow to the top.  The modest uplift in prices came as no great surprise following Monday’s hammer and the question will be whether we are likely to see a period of consolidation at this price level or a sustained move higher following the long slow decline from mid March.  Today’s trading has, so far, reversed yesterday’s gains which would seem to suggest that the former outcome is more likely rather than the latter at present and indeed this may simply be this pair taking a breather at this level before the bearish tone is reinstated.   Our longer term target for this pair remains at the 0.80 price level where strong support may provide an insurmountable obstacle to a deeper move.  With all markets anxiously awaiting the outcome of the FOMC meeting trading today will be restricted to a relatively narrow range and even items of fundamental news on the economic calendar for both Europe and the UK have failed to inject any momentum.  All the news for the Eurozone is covered in the main Eurodollar site whilst the highlights for the UK can be found on the pounds to dollars site.  This morning has seen a couple of interesting items from the OECD and ECB, the former declaring that the UK’s debt crisis is set to continue and the latter accused of a “stimulus by stealth” by pumping a record 442bn Euros into the Eurozone banking system on the basis of a  first ever offer of unlimited one-year funds as it battles continental Europe’s severe recession.  Given both the technical picture and market background my trading suggestion for the euros to pounds pair is to stand aside until the pair have had a chance to re-base at 84.

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