Wait for it ... Wait for it ... Draghi will "save the day" ...

The driver of the euro has changed a bit in recent months. Certainly expectations have.

Traders now expect the European Central Bank's new efforts to support its economies with ultra-easy monetary policy will drive yields lower. And this narrowing yield differential between the US and Europe will weigh on the common currency. 

Remember, before, action from the ECB to support economies was seen as alleviating a Sovereign debt problem, reducing pressure on economies and leading the way to growth; and that was bullish for the euro.

Not anymore.

Yesterday, when the ECB did not follow-up last month's rate cut with any new action, the euro took off. It rallied up through key resistance as the US dollar was hammered.

Ambrose Evans-Pritchard is quick to the scene, as always, with some comments:

The European Central Bank has refused to take any further measures to lift the eurozone out of recession and curb rising unemployment, counting on spontaneous recovery later this year to do the job.

Mario Draghi, the ECB’s president, said the wild moves in currencies and global stock markets over the past two weeks do not change the fundamental picture, though the bank has downgraded its economic forecasts and expects a deeper contraction of 0.6pc this year. “It is not enough to justify immediate action,” he said.

“The ECB seems to have given up. It is as if they have decided that there is not much more they can do and will simply allow events to run their course,” said David Owen from Jefferies Fixed Income.

Could it be this easy?

Is Draghi certain to come out in support of further ECB action to alleviate economic concerns after being accused of giving up? Will he be driven to open his mouth again and reassure the world that something can and will indeed be done?

I think the only question is when.

Two months? Two weeks? Two days?

If the technical picture has anything to say about it, the waiting period could be short-lived as expectations shift from "what have you done for me lately?" to "oh, it's just a matter of time."

In other words, the euro's recent climb could quickly hit a ceiling. And any reassurances from Mario Draghi's ECB could help turn the euro lower:

[Click on the thumbnail to view a full-size image of EUR/USD.]

A third wave bumping up against a 61.8% Fibonacci retracement level looks like a logical stopping point. Aggressive traders may consider shorting EUR/USD between $1.33 and $1.34. Others may want to see EUR/USD break below a confluence of key moving averages before taking a short position.

US Nonfarm Payrolls to be released soon. Good luck!

-JR Crooks