EUR/USD continues to be one of the more difficult pairs for traders as it simply cannot make a decision. The various forces that are pushing and pulling it are all important, and as such it is difficult to figure out which way it “should” be traveling at times.
When you look at the situation in Europe, you see that Spain is now officially in recession. Certainly this is no surprise, but it can’t help in a trader’s bullishness for the Euro. The European Union continues to see yields rise in such places as Italy, Spain, Portugal, France, and many other countries on the continent. The region also has the issue of banks that are borrowing funds from the European Central Bank in massive amounts, signaling that the problems run much deeper than a lot of people understand.
On the other side of the Atlantic, the United States has been posting better numbers lately. However, over the last week or two we have seen a downturn in the bullishness of the economic figures. This has some worrying about whether or not things in the US are as good as people had thought. The Federal Reserve Chairman Ben Bernanke has recently suggested that the Fed has the ability to ease even further if the economy deteriorates further. This has many traders starting to salivate at the idea of further easing in the United States, and this weakens the Dollar as a result.
Triangle is still there
The descending triangle that I have suspected as being formed is still there at the end of the Monday session. The downtrend line has held as resistance yet again, and the 200 day exponential moving average is still above. This has me thinking that the path of least resistance is still to the downside, but a catalyst will be needed in order to see this move. On a break of the bottom of the doji for Monday, I am going to sell this pair expecting to see a run back down towards the 1.30 area. As for buying, I still need to see a daily print above the 200 day EMA and the 1.35 level.
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