Forex Technical Update
EUR/USD Chart 1H 5/31/2012 7:32 AM EDT
There's been an influx of headlines regarding the debate going on in the eurozone on how to deal with the Grexit prospect, the Spanish banking woes, the theme of growth etc. The EUR/USD held above 1.2350 during the 5/31 European session and has corrected back above 1.24 as data from Germany gleamed in comparison with recent anything coming out of the eurozone. The market is gearing up for the US session, and the EUR/USD has retraced 23.6% of this weeks swing from 1.2616 to 1.2354.
The 1.24 level would be the first level of renewed selling pressure. The RSI has resolved any short-term oversold condition, and should not break above 60 if the market has persistent bearish momentum.
If the market can't push and hold below 1.24 in the US session, the next key intra-session resistance level is near the 1.2450 level. 38.2% retracement and a declining trendline is projected there. Meanwhile, the RSI would likely be testing 60 at that point.
A break above 1.2520 would be a strong sign that the market wants to start consolidating. But, there is still further room to the downside before the 1.2330 2008 low is tested.
risk factors: US data can be a catalyst for the EUR/USD. But the thing is if the data is bad, risk aversion will be seen which can boost the USD, UNLESS the market is convinced that monetary stimulus is more likely because of it, which would pressure the USD. These dueling dynamics can make for a choppy day.
Before the big risk event in Tomorrow's (6/1) Non-Farm Payroll, we should probably remain bearish on the EUR/USD. While we might not get down to the 1.2330 level, coming back to retest the 1.2354-1.2375 mini-consolidation area is very possible.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.