EUR /GBP Price Reversal

Bloomberg's survey of market sentiments in stocks and the overall economic outlook have been more on the sluggish economy from jobs, housing and consumers feeling the pinch on commodity prices including the cost of oil causing a spike on the gas pumps have limited the market the ability to sustain its growth. With stocks tumbling to its support levels on the 12K levels made it all possible for traders to short on rallies.

However, the real cause for the European currencies to move lower was the arguments between the ECB and the other European leaders on the debt crisis. It has affected the Euro more than seeing a strength on the USD. Which obviously have been the case. In spite of the negative numbers from last week's report still prompted the USD to recover for a very timely. manner. Although, this does not assure a true trend reversal but it does have a good basis of a technical bottom price for the USDX at the 73.10/50 basis point and support levels. Currently at the 74.32bp have given a much awaited and reluctant traders to call this move a true reversal. Of course until such time whenever new lows would appear at the closing of next weeks trading.

However, talks of QE3 has been minimal but it has been up in the air from most of the news reports. But for the time being, the end-result for the EURUSD, GBPUSD and the EURGBP to move lower is in the making. And in line with the cyclical patterns ending of the 2nd quarter has been in the watch for sometime where a USD recovery is expected. Against all negative market sentiments for the US to recover overwhelmingly prevailing in the market place.

With that expectation, risk of shorting GBPUSD vs. our EURGBP cross would be a more likely strategy to protect the gains made while taking a short term Long on the USDCHF as a net position. With a very minimal risk on fresh new position to go long at 0.8378 USDCHF is well worth it comparing its historical price levels regardless of any market condition. A more speculative decision in the final event where momentum builds in a short term basis where the US dollar is showing it color as of the moment.