EUR/USD fell during the session on Monday, after the ridiculous urge that we saw over the previous three trading sessions. It should be noted that the top of the shooting star from the Friday session stopped right at the 1.24 level, and this suggests that we sell more of a short covering rally than any type of fresh buying. The reason I say this is simply because the 1.24 level is the beginning of the first serious resistance area above, and the fact that we were repelled right there tells me that the buying was probably forced at best.
The action on Monday suggest to me that we will fall from here, but the bounce in the later hours of the day also lets me know that it's very unlikely that it will be a straight shot down. Looking at this chart, I think that more than likely we will continue the downtrend - but I think this is more of a consolidation play than any type of meltdown that coming.
ECB
The European Central Bank is meeting on Thursday, and should have some type of rate decision at that point in time. What will be interesting is how they choose to ease, as they will have to at this point. While this gave the Euro a bit of a boost for a few days last week, the reality is that any type of monetary easing will more than likely diminish the value the Euro over the long-term.
I believe that we are heading back down to 1.20 in the near term, and will begin to sell again if we manage to break the Monday lows. As for buying, I simply see far too much noise above you're going all the way to the 1.27 level. Also, you have to figure that there are plenty of headline risks out there that can get in your way as well. Because of this, I still refused on the Euro, and it must be said that the US dollar is king right now. Selling this pair is by far the most obvious trade in the Forex markets currently.
