There were some interesting FX moves, particularly in the euro and sterling which both managed to regain some ground against the greenback. This has put these two pairs right in the selling zone. Cable is testing $1.5800 and I feel this is a key level for the pair in the near term. Meanwhile,
EUR/USD is trading at $1.2500 which is also a key level. German CPI and another Mario Draghi speech will be the key events on the calendar today and could result in renewed euro weakness.
There is also potential risk coming from Greece with bond yields spiking on concerns around the disbursement of the last tranche of aid. As far as next week’s ECB meeting is concerned, it seems the market may be paring back expectations of immediate action after ECB Vice President Vitor Constancio suggested they will continue to assess data until Q1 next year before making a call. There is also a downtrend resistance line which comes in at $1.2500; failure to break this could see November lows retested.