Remember Ireland? Yeah, the same Ireland that just a few months ago was causing concern of a potential euro break up in the future. That same Ireland has once again come under the radar as the nation gave the main opposition party, Fine Gael, a majority hold in the lower parliament on Friday. According to the WSJ, Fine Gael controlled 70 of the 154 seats filled. This puts the party in position to negotiate the terms of the $92B bailout Ireland got from the European Union.
Ireland and the ECB have put euro into focus again this week. Supported by speculation on rate increases in the EU, the euro has rebounded significantly since the bailout of Ireland.
As you can see from the above chart, the euro bounced off a strong support level and the 50MA in mid-February. However, the currency ran into resistance at 1.3825 a few days ago, which seems to be causing concerns of a double top formation. The ECB has a scheduled policy meeting on Wednesday this week, with a public announcement on Thursday. The meeting should give the euro short term momentum in one direction or another, but if EU comments on inflationary pressure and interest rates hike are less "hawkish" than expected, then we can expect a material pull back in the currency reinforced by the double top formation.
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