By: Christopher Lewis
EUR/USD continued to chop around during the Tuesday session as the markets continue to try and digest the latest headlines. The European situation is widely known at this point, and the troubles in places such as Spain, Portugal, Greece, and now France will be part of the focus for market participants in the near term.
The French elections are of particular interest as the Socialists look likely to take control of the country again. The frontrunner in the Presidential election Mr. Hollande has already suggested that some kind of renegotiation of the European agreements could be in order. Although he hasn’t explicitly suggested what it is that he wants to talk about, any signs of a reneging on the financial austerity deals could rock the markets. With the election being this weekend, there is no real surprise that the markets might be quiet overall.
The Non-Farm Payroll numbers come out on Friday as well, and this would go a long way in trying to determine whether or not the Federal Reserve is likely to expand its easing programs. The next couple of sessions will be very important, and the fact that Greece also has an election certainly does very little to think that the markets may be careful in the mean time.
Triangle?
I am still looking at this recent downtrend line as a potential triangle being formed. The 200 day exponential moving average being just above it doesn’t exactly hurt either, as the trend traders out there will be cognizant of its presence. The market has been tight lately, and as a result the move that could come has potential to be very strong indeed.
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The buy side of this trade isn’t one I am looking at currently. This is because the Europeans have plenty of potential landmines going forward, and the 1.35 level seems very resistive. In fact, we have to close above that in order for me to buy. A break below the Wednesday lows is enough for me to short this market however.