By: Bastian Rubben
The US stock markets closed last week with a strong finish on the background of improving employment statuses, as the US economy created 227K new jobs during the past month. As I warned here after the sharp declines that occurred Tuesday, the investors took the opportunity to push more money into the stock markets and those who thought that a significant bearish correction was about to begin and opened short-positions, and are now facing great loses.
The encouraging fundamental data supported the USD against the major currencies despite the risings in Wall Street, which usually has a negative correlation with the USD. Likewise, there were developments that weakened the Euro, and the main one was the official declaration of a Greece default. Everybody expected this announcement for several months but the official report had a strong bearish influence on the European currency.
On the technical matter, the EUR made the bearish pattern "Head & Shoulders" on the daily chart against the USD. As you can see, this is not an accurate pattern that gets support on an accurate supporting-line and therefore it is harder to point out on a specific level for opening a short-position. However, if the break-down succeeds, the Euro might fall down to the level of 1.28, but before that it will have to break-down the support at 1.30. Nevertheless, we might see the EUR recover from the current support and if it crosses above 1.33, it will be a bullish signal for the currency.