The chart above shows the location of the 200 period EMA on the weekly chart for the British pound / US dollar pair. As can be seen, this is well respected by the market. Even on the occasion, at the end of 2013, when price continued through what was then resistance at this level, it took quite a while to do so.

Now there are good reasons to think that the support this indicator offers at the present time could be a turning point. The British economy goes from strength to strength. The Bank of England is widely believed to become the first of the major central banks to raise interest rates. And yesterday, for the first time in many weeks, the US dollar went into reverse against all of its counterparts.

OmiCronFX had been backing dollar strength and yesterday brought all this to an end, at least for now. Happily, the Mandelbrot routine was in play and, with its emphasis on risk control, was able to exit from all positions with manageable drawdowns. However, this newfound greenback softness could be the catalyst for a turn to the upside for Sterling, led by the GBPUSD pair.

Today is ECB day

Later today sees the European Central Bank interest rate announcement, monetary policy statement and press conference. Mario Draghi’s words will be parsed carefully, as usual.

He is not expected to say anything that will, per se, lead to Single Currency strength, especially given that inflation has continued to fall since the last meeting.

But the Euro had been well beaten down of late and there is a feeling that anything he does say, in terms of monetary easing, may already have been priced in, at least some extent.