Take note that the top of the channel is close to the 1.3050 minor psychological level, which could act as resistance for EUR/USD. This area also acted as an area of interest in the past, and the lack of good news from the euro zone or any major market catalyst for today could keep the pair’s rallies at bay.
Of course, don’t forget that the European Union Economic Summit is going on today until the start of the weekend, which suggests that there is still some event risk. Also, the U.S. is set to release a bunch of reports, namely the CPI, Empire State manufacturing index, and University of Michigan preliminary consumer sentiment report during today’s New York session.
Shorting at the top of the channel with a stop above the 1.3050 line in the sand could provide a decent 2:1 reward-to-risk ratio for a day trade if you’re aiming for the bottom of the channel or just the 1.3000 major psychological level.
By Kate Curtis from Trader’s Way