The EUR/USD pair has been very bullish as of late, but the Tuesday session saw a very lackluster performance. The comments out of the Federal Reserve Chairman Ben Bernanke’s mouth on Monday about keeping rates low for as long as possible really gave this pair a boost. However, there was very little follow through during the Tuesday session, and this should give the bulls a bit to worry about as there weren’t many signs of massive resistance above until the 1.35 handle. Because of this, we are a bit suspicious of the pair at this point.
The 1.35 level will be a big one to watch if the pair can find it. The failure to get to that point would be massively bearish, and as a result we would become massive sellers. The market drifting up to that level would leave very little in the way of room now, so we are willing to wait until the market reacts to the mark. Until then, it is going to be choppy going.
The Euro will continue to have issues involving the debt markets, and even though we have seen a bailout for Greece again, the party could be winding down again as the yields for some of the periphery countries are rising still. The bonds markets are still key to this currency pair, and as such – any Forex trader needs to at least be somewhat aware of which direction they are heading in places such as Portugal, Italy, Spain, and Ireland.
With all of these variables in mind, we are more apt to sell this pair, but are hoping to see a failed attempt at 1.35 before we do. A break back below the 1.3250 level would also have us selling. On a daily close above the 1.35 level, we would be more than willing to admit that we were wrong and buy. However, the likelihood of the Euro running upward for any real length of time is unlikely. If you are looking to possibly play Dollar weakness, this isn’t the pair for you as Europe has many more issues that the United States presently.
Written by FX Empire