I entered long EURUSD at 1.2934 last week as prices broke above falling trend line resistance defining the downward correction from the February 1 swing top in the aftermath of the ECB policy announcement. The setup suggests the markets may be ready to shift focus away from ebbing Cyprus contagion risk to ECB/Fed balance sheet dynamics to return into focus. This is supportive for the pair as the FOMC continues to ease while Mario Draghi and company achieve a de-facto tightening (albeit at a very slow pace) via 3-year LTRO repayments. My initial target is 1.3139, with a stop-loss to be triggered on a daily close below 1.2745.
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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