The Euro continues to consolidate near the 1.10 figure against the US Dollar having recovered as expected following the ECB monetary policy announcement. An increasingly pronounced inverse correlation with the S&P 500 speaks to sensitivity to risk trends and warns the upcoming FOMC rate decision may rekindle volatility.

A daily close above the December 9 high at 1.1043 paves the way for a test of falling trend line resistance capping the upside since late August, now at 1.1242. Alternatively, a move below resistance-turned-support at 1.0938 opens the door for a challenge of a long-standing horizontal pivot at 1.0818.

Looking beyond near-term event risk, the dominant multi-year EUR/USD trend continues to favor the downside. With that in mind, we will remain on the sidelines and wait for the current upswing to fizzle, aiming to establish short as the long-term down move resumes.