The EUR/USD pair hardly moved at all on Wednesday as the markets continue to question the Greece issues. The announcement of a deal between Greece and the troika caused a bit of a reaction a few days ago, but now the hoopla has all but died. Interestingly enough, we are still at the top of the consolidation range that has been the main trading parameters for this pair lately.
The 1.3250 area is not only a resistance area, but it is also a 38.2% Fibonacci retracement level from the fall last year. This should continue to weigh on the pair, and there is significant resistance all the way up to the 1.35 level as the noise looks very choppy. The 50% retracement level is at roughly 1.34, and with all of this potential resistance above, we are hesitant to buy at this level.
The fact that the market isn't overly impressed by the Greece deal would also have us concerned at the moment. The pair has been rather resilient lately, but the fact is that the agreement should have produced more fireworks overall. Even the stock markets couldn't be bothered to rise during the Wednesday session, so it looks like a general malaise could be coming.
We are not necessarily looking for some kind of meltdown at this point, rather a pullback. If the Euro has proven one thing lately, it is that there is always someone out there that wants it. Because of this, we think that overall it falls, but it will be choppy on the way down. The 1.30 level starts a significant area of support that goes all the way down to the 1.29 handle. It is below there that we would find any real momentum to the downside going forward.
The market just looks like one that wants to do nothing for a while. If participants are tired, it makes sense as the movements have been so erratic over the last several months. We are looking to sell on weakness, but only for a short-term move down to 1.30 or so.
EUR/USD Forecast February 23, 2012, Technical Analysis
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3