EUR/USD rose during the session on Thursday as the market found the 1.30 level as being overly supportive. The pair had been bearish for much of the session, but as if on cue - the market suddenly found good news when it needed it the most. This has been the pattern lately, and it makes one wonder at times...
However, the news that the European Central Bank was willing to swap out short-dated Greek bonds for longer-dated ones got the markets running into risk related assets. The story isn't' confirmed at the moment, and is only a rumor. Because of this, it will only take one comment to crush the bullish move in our opinion.
The hammer formed for the day does suggest that there is more to come from the bulls, but the recent action seems to suggest that the 1.3250 level will be resistive and could keep a lid on the markets. The 100 day EMA is sitting just above that level, and it is the 38.2% Fibonacci level from the massive drop that we saw back in November. With all of this in mind, the area should continue to fight the bulls.
The pair did have an impressive day, and because of this it appears that the headlines are still what is going to be driving this market overall. The news flow out of Europe will continue to throw the markets around, and this pair will be by far the one most affected. The Euro is a difficult currency to own at the moment, but it is as if many traders simply don't know there are other pairs to trade. There is a serious focus on this pair at the moment, and as such it will continue to be whippy at best. Sudden moves will be the norm as the headlines keep coming out.
The pair looks consolidative to us, and we are willing to avoid it, but the range will be respected. Until we get a daily close sub-1.29, we aren't selling. The breaking of the 1.3250 level on a daily close would have us buying.
EUR/USD Forecast February 17, 2012, Technical Analysis
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3