The EUR/USD pair fell for much of the week, but found buyers on Friday to push prices back to form a hammer on the weekly chart. The 1.30 level has shown itself to be supportive again, and this hammer forming right on that level shows just how important the level is. However, the previous week was a shooting star, which of course is bearish. In this environment, it looks as if we are going to consolidate in the general vicinity as the larger forces continue to push and pull back and forth in this pair.
The Euro itself has the bigger risk to hold at this point as the Portuguese bonds are now yielding unsustainable levels, and one has to wonder how far the Portuguese are behind the Greeks in needing bailed out. The issues in Europe are not going anywhere in the near future, although it looks as if the market is willing to look away at the moment.
The top of the shooting star from the previous week can be found at the 1.3250 level, and looks to be the level that the pair will have to break above in order to show true bullish movement. However, just above the area is the 1.35 level that looks to be overly resistive. With the fundamentals in Europe murky at best, and the massive resistance areas just above, we are more likely to wait until we see weakness above.
The trend has been down for a while, and we think that the European Central Bank is now on a path to weakening the Euro, as Mr. Draghi will do his best Ben Bernanke impersonation. The higher Euro is going to be punishing for the economy, and the region is going into a recession. This will continue to erode the confidence in the Euro, and as a result we are net sellers of this currency. The rallies should simply be opportunities to sell the Euro, especially at the 1.3250 and 1.35 levels. Until we get a weekly close above the 1.35 level, we are not buying.
EUR/USD Forecast for the Week of March 19, 2012, Technical Analysis
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3