EURUSD Holds Above 1.21 After Disappointing ECB Decision

Summary:

EURUSD forms a possible double top formation at 1.2170 and so bears wait for a clear break lower before shorting the pair.

Yesterday’s ECB decision brought the EURUSD pair back to the highs. The ECB sounded hawkish and uncertain, exactly the opposite of what the market expected. As such, the EURUSD and other Euro pairs squeezed higher.

Brexit is still a theme, too. The dinner between Boris Johnson and Von der Leyen ended up with both parties calling for a no-deal on Brexit. As such, the GBP is in free falling while EURGBP trades now close to 0.92. Effectively, it means that the flows support the EURUSD bullish thesis, too, just as the ECB hawkishness did.

Coming back to the ECB, the central bank did expand the PEPP program by EUR500 billion. Also, it did improve the TLTRO terms. However, it also made it more difficult for banks to access the TLTROs, something that the market viewed as hawkish rather than dovish.

EURUSD Double Top

Despite the ECB delivering the wrong message, the EURUSD looks toppish here. It formed a possible double top at the 1.2170 area, and the focus now shifts to a clear break below 1.21. So far, all attempts have been bought, but this being a Friday, we may see the level giving way. Bears may want to sell a break below 1.21 with a stop at the highs and a take profit that respects the 1:2 rr ratio.