EURGBP may accelerate higher once 0.74 is breached

FX:EURGBP   Euro / British Pound
The EUR/GBP             cross is currently in a technical position that I'm not very comfortable with. On one hand, prices remain in a long-term downtrend explained by monetary policy divergences between the BoE and the ECB. But on the other hand, the euro             has been recently bid in despite of Mario Draghi's recent talk of expanding/prolonging the ECB's current QE program. The euro             , being a major financing currency for carry trade positions, will likely head higher if equities markets start falling again (following recent Chinese industrial production + fixed capital inbves

The long-term fundamentals haven't changed at all, but current market conditions warrant being careful with shorting the euro             when speculative short positions in futures markets are rising (60k net short as of last Friday). The EUR/GBP             may break above the 0.74 handle, which would likely lead to an extension higher over several days, perhaps all the way up to 0.76. At that point, this currency pair would become very interesting as prices would be testing their long-term bearish trend line , which reflects the monetary policy divergence theme initiated in the Q3 of 2013 (this came from bets on a BoE rate hike).

Conclusion: my gut feeling tells me that it's risky shorting the euro             at these levels, but 0.76 may provide a decent opportunity in a couple of weeks. If prices reach the trend line , I will update this idea. A break below 0.72 would increase the bearish potential in September given the failure to break above the 200-DMA             .
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