By: Christopher Lewis
The EUR/USD pair had another bullish session on Monday as the Euro has received a bit of a reprieve after the Greek bailout. The markets have shifted focus for the moment, but in reality the situation hasn’t changed much, even after the latest round of wealth transfers.
The Portuguese bond markets are starting to show signs of continued distress as yields spike. The bond traders seem to be committed to punish much of the periphery of Europe for their debts. The Spanish are presently being worked over fairly well also. The Hungarians, although not Euro denominated, owe the ECB a ton of Euros, and the Italians, Belgians, and Irish are all in a world of hurt. Quite frankly, the situation in Europe is a mess.
The elections that are coming over the next several months in Europe offer real chances of government changeover. The reality is that a lot of the politicians that have paved the way for these bailouts will more than likely be gone. Greece for one will more than likely walk away before it is all said and done.
1.3250 and 1.35
The EUR/USD pair has a massive resistance level at 1.35, and it isn’t until we close over that level on a daily chart that I will decide to go long. Go frankly, I don’t have any interest in buying before, simply because there are far too many issues in Europe on the whole. As a general rule, where there is smoke, there is fire. There has been a lot of smoke coming out of Europe over the last couple of years, and we have a long way to go….
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1.3250 also offers resistance. This area has been pretty solid as well, save the spike to 1.35 we saw a couple of weeks ago. The plan for me at this moment is to sell Euros, but only on signs of weakness at either the 1.3250 level or the 1.35 level. The pair has been so volatile lately that I will only take these two particular signals to sell as times like this demand precision. The close above 1.35 does have me going long – but I must admit that is the least favorite of the possibilities.