By: Christopher Lewis
The EUR/USD pair had a bullish session on Friday as the “risk on” attitude came back into the markets for the day. The Spanish managed to sell their bonds this past Thursday, although they had to sell them at slightly higher rates. This seems to have been just enough to get the bulls active for the week, and especially this Friday.
The pair has been stubborn to say the least. After all, there are plenty of reasons to run from the European Union and its financial troubles. However, there are rumors in the markets of several emerging market central banks being involved in propping this pair up as they have diversified away from the US dollar over the last few years. Some of the rumors include several Asian central banks and the Brazilians as well.
None the less, there is someone picking this pair up at the 1.30 level. The moves have been almost clock like in their precision and reliability. The level is obviously one of the most important levels in the Forex markets at the moment. If it gets breeched by the sellers, the Euro could be in serious trouble.
Temporary Breakout
The action on Friday was actually a slight breakout of recent consolidation. The 1.32 level seems to be the point at which the bulls will have taken control for the most immediate areas. However, with the 200 day exponential moving average floating just above looks like it will come into play relatively soon, and should keep this pair lower overall. Because of this, I am still bearish of this pair, even with the sudden move higher.
.png "EUR/USD Daily 42312")
The lower high looks very much like a possible triangle trying to form, and if it does it would suggest that a breakdown below the 1.30 level sends this pair down to the 1.25 level. None the less, the pair looks clear below the 1.30 level down to 1.26 at the least. I am looking to sell the pair if we see a weak candle near the mentioned trend line for the triangle. In fact, unless I see a close on the daily chart above 1.35, I am only selling.