By: Christopher Lewis
EUR/USD has spent the last several sessions rising in value as the markets try to get ahead of any potential agreement on which way to go forward in the European Union’s ongoing debt crisis. There is a well-known axiom about the market looking ahead six months, and it can be said that is what must certainly be happening now.
However, we have seen this movie before. The market continues to try and rally on any hint of good news, only to get smacked back down on the headlines that come out right afterwards. It is in this prism that we have to look at the EUR/USD pair, although it certainly can rise over time. However, if you have gotten bullish every time there was a new “solution” or even “potential solution”, you are probably under water at this point.
Because of this, I have my doubts about the potential “workaround” that the Greeks and their debtors are supposedly close to as of close on Monday. In fact, I don’t even care as it is obvious that the problems in Europe are structural in nature, and not simply a matter of a handful of governments lying about their finances. It has become obvious that the common currency makes no sense between many of the countries, and as a result – in the long run the Euro will either change, or die.
1.30 looms large.
The market slammed into the 1.30 area and rose above it during the Monday session. This is a major area, but 1.30 isn’t the end of it. Truthfully, it looks as a close above 1.31 will be what it takes to be convincing to the upside, and even so – 1.33 looks like an issue as well. The trend is down, and although I can see the strength, it is difficult to jump on the Euro bandwagon at this point in time as every time you have recently – you have been burnt. Also, looking at the EUR/CHF pair – the Euro couldn’t rise against a currency that is being held down in value by its own central bank. This doesn’t inspire confidence from what I can tell. Because of this, I am looking to see if the area produces a hammer, large red candle, or outside bearish candle to sell.
