The EUR/USD pair fell on Friday as the market continues to be driven by headlines out of Athens. The lack of any deal continues to weigh on the Euro, and the fact that the pair has been a bit overbought recently will more than likely continue to put bearish pressure on it unless some kind of significant deal is reached over the weekend. The truth is that the last rumor of a deal didn’t push the value of the pair up as much, and it might be a sign that the market is finally bored with the games that the Greeks are playing.
The Thursday candle formed a nice shooting star, and if you watched our video you know that a breakdown below the lower part of the range would signal selling in this pair. The 1.32 level also gave way, and as a result we think the bearish momentum should continue down to the 1.31 level before we see some kind of bounce. If we get a sub-1.30 print, this would send this pair much lower, perhaps down to retest the recent lows in the 1.26 area.
With the debt issues in Europe, it is very difficult to buy the Euro for any length of time, and we think this is what happened this week. We saw bullishness in the beginning, but the reality came back into play, and the downward momentum continued. The selling of this pair on rallies is our strategy now, and an aggressive selling strategy will be employed under the 1.30 level as this would show a real capitulation of the bulls.
Of course, there is always some kind of hope in this pair, and as a result it is difficult to hold onto bearish positions though the inevitable rallies that the stock markets always seem to produce. However, the fundamentals in the European Union continue to deteriorate, and we think that the likelihood of a positive and long-term solution is looking less and less likely. The writing is on the wall, and now that the Portuguese are starting to think about a deal – this could open the floodgates as it is going to be hard to believe that one nation will pay in full while their neighbors don’t have to.
Written by FX Empire