Summary:

• De Guindos expected to be announced as ECB VP later today
• Could pave the way for Weidmann to be next President
• Euro drifting lower after hitting 3-year high against USD last week

News that the Bank of Ireland’s Lane has pulled out of the race to be the new vice president of the European Central Bank has seemingly paved the way for Spain’s Luis de Guindos to assume the role. An announcement is expected at some point today and with Vitor Constancio’s term due to end in May, the new man could be in place in the not too distant future. 

 The Euro is trading little changed today, dropping lower against the USD by around 0.1% at the time of writing. Source: xStation

The expected appointment of Mr. de Guindos could have further reaching implications going forward, with the decision seen by some as leading support to Jens Weidmann being the next President. Mario Draghi’s 8-year term is due to expire in October 2019 and should the VP be taken from one of the Southern countries in the bloc then some believe this will support the case for a German to take the lead role. 

 Jens Weidmann is already a strong favourite to replace Draghi and should de Guindos be announced as VP then this could be seen to be even more likely. Source: Bloomberg

We earlier looked at the EURUSD and mentioned why the so-called “twin deficit” in the US and the current account divergence may lead to some appreciation going forward, so now lets look at 2 other pair which involve the single currency, the EURJPY and EURTRY.

EURJPY

This market has been coming under pressure lately and has in fact fallen below its 200 day SMA for the first time since the French elections. This could be seen to suggest a change in trend may lie ahead but bulls will be looking to the key prior swing level at 131.30 as an important support. As long as this level remains intact then the market won’t experience any sustained downside but a break below 131.30 could lead to a significant correction of the large move higher seen in the past 12 months.

 The market has fallen below its 200 day SMA for the first time in almost a year and a drop below 131.30 could be seen as a major negative development. Source: xStation

EURTRY

This pair was one of our 2018 trade ideas and last week printed an inverted hammer at prior resistance around 4.73. A potential double top may now be forming and with the multi-year bull market seeing incredible moves higher some pullback could lie ahead. 2018 lows at 4.48 are an important support level to keep an eye on but a break below there could see 4.19 trade.

 An inverted hammer on W1 at prior resistance around 4.73 could have created a double top for this market. Source: xStation