The Euro is potentially completing a 10+ month inverse, head-and-shoulders bottom (see the chart below). Key support is now at 12200-1 2300, basis the Jun 2006 front-month contract (ECM6). This level must hold now on pullbacks (note the 12205-12282 real gap from the Apr 03-04 day session), possibly occuring on the Bank of England and ECB meeting results due out tomorrow morning at 0700 and 0745 ET as well as the US non-fam payrolls (NFP) report due out at 0830 ET Friday. A daily close above 12400 will confirm the pattern with an upside target of 12700-12900.
Note that the same pattern is apparent on the US dollar index (DXC) – though obviously a topping pattern. A close below 8775 will confirm at least a short-term top for the Greenback.
Also keep an eye on the British Pound or cable (BPM6). A close above 17620 is the first signal for its inverse head-and-shoulders bottoming pattern with a close above 17840 confirming the bottom. The upside target is 18400-18600, basis the June contract.
