By: Christopher Lewis
The EUR/USD pair rose for the session on Wednesday, but failed to impress in doing so. When it comes to the Euro, there seems to be far too many issues out there that could influence the currency into a weak position and because of this – I simply am not looking to buy it at this point in time.
There are many issues, and some are more obvious than others. For example, the Spanish and Italian bond yields are a bit on the high side lately, and this signals that perhaps the EU will find more trouble when it comes to selling debt in the near future. Also, one would have to be concerned about the massive amounts of capital that banks in periphery countries are now borrowing from the ECB. With this in mind, there are a lot of concerns for the Euro bulls to focus on.
1.30 – Final Stand?
The 1.30 level is a massive support level that the pair has tested several times over. The pair looks like it simply must stay above it in order to remain even remotely bullish. The candles that have formed over the last few sessions looks like the bulls have been trying, but the failure to hold onto the gains certainly shows a real lack of enthusiasm. Perhaps it is a simply lack of follow through in comfort from the austerity measures taken in Greece, as well as the bailout. It could also be the simple fact that it seems like almost every week, we are starting to see more problems in the EU that weren’t necessarily on the minds of the market overall.
.png "EUR/USD Daily 4/12/12")
The pair is an obvious sell for me. However, I won’t do it until we get a daily close below the 1.30 level. The other chance for me to be a seller is if we happen to get a bounce, but this is looking less likely over the last couple of sessions. If we do get it, I suspect the 1.3250 area could produce the kind of weakness in a rally that I could sell.