The EUR/USD pair had quiet session on the Wednesday trading day as the 1.3125 area continues offer resistance. This of course was after an extensive rally during the Tuesday session, so a bit of a rest at resistance would have been a huge surprise. As you can see on the chart, there is an uptrend line that the market has respected for quite some time, and I believe that at this point time we are making some type of decision.
The question we now have at the 1.32 level is whether or not this is a double top, or a new high. I believe that the next session or two will be very crucial in this marketplace, and it is of no when sense that there is an EU meeting simultaneously. If the Spanish finally hold their hands out for the bailout, the euro will skyrocket. However, this may eventually cause the euro to lose value as well, as the ECB prints more Euros. However, this will happen down the road and not anytime soon.
1.32 And the next 48 hours.
The next 48 hours will be very important for this currency pair. I see a lot of noise up to the 1.35 handle, but if the Spanish finally relent we could see that area taken out in relatively short order. It certainly appears that the market is starting to price this in, and as such the reaction will be swift as the rest of the world tries to hurry up and get on board. After all, the Europeans have disappointed time and time again, so there are certainly skeptics out there.
Whether or not this happens is a relevant. What we're concerned with is what happens on this chart. I look at 1.32 as the gateway to the 1.35 handle. If we can get above that on a nice daily close, that I will be long of the Euro against the US dollar, something I am not particularly keen on. However, if we managed to break through the uptrend line, I would be very short of this pair.