EUR/USD Daily Outlook June 25, 2012

On Friday, we again saw a relatively flat Euro based upon the fears in that region. The region continues to be the epicenter of all things Forex related, and the news flow has been moving this pair back and forth rather violently from time to time. It is because of this that I found the best way to trade this pair is to simply step back and pick a direction. Obviously, the direction is down even though we are in a little bit of an up trending channel for the month of June.

Currently, the pair looks very vulnerable to downside shocks. However, the 1.25 level is just below the current price action and should offer some type of support as it is a large round number. It is because of this that I believe we could see a little bit of choppiness in the near future. However, looking at this currency pair there is very little doubt as to which direction the overall trend is running in.

Late this week, the European leaders are getting together to come up with yet another possible solution. The real question is how long will the market continued to be patient with the politicians in Europe? There are signs that we are starting lose patience on the whole, as each announcement and its subsequent rally last less and less time.

Bearish flag and 1.25

The pair currently is forming what looks to be a bearish flag. As I mentioned earlier, the 1.25 level is just below and looks to be supportive. As a general rule, I won't take a trade until we passed through a large round number such as the 1.25 in this pair. However, it should also be noted that the pair is projecting a move down to 1.15 as measured by the "pole" of this flag. While this does sound a little bit outlandish at this point in time, there is a real possibility that the euro zone ends up going into recession for several years. The slow growth and extremely low rates, coupled with possible higher rates in the United States could turn this pair into a slow grind downwards. For now though, I am becoming aggressively short south of the 1.2500 mark. I will not buy the Euro; there are simply far too much drama out there.