By: Andrei Tratseuski
The timid profit taking has put the Euro in crossroads of between Support and Resistance. The current rumors of Spain's sovereign debt issues have sparked profit taking in the long positions. However, the markets are not hundred percent sure that the following possesses a jump start to another Euro sell-off. The markets were also unfazed by weak US figures. US housing data significantly under printed the forecasts. Nonetheless, the figures did not move the Euro to the downside and the EUR/USD remains resilient to any sharp sell-off.
Currently the pair is trading within a well-defined upward channel. In retrospect it is in a short term uptrend. You know what the markets say, “trend is your friend". Therefore, a prudent investor will play the pair to the upside. However, the pair may retrace back to the support line of the upward channel. On the other note, EUR/USD has defined a bottom for the time being. However, according to the PPP fair value: EUR is still roughly 8% overvalued to the USD. Nonetheless, it is unlikely that the currency pair will break below 1.20 for a considerable period of time.
By the way, if you followed yesterday article. The resistance level worked out perfectly and the AUD/USD is currently consolidating after reaching our resistance point.
AUD/USD Technical Analysis- Short Term Brak Out Is On The Horizon.
