Forex Technical Update
The EUR/USD chart in the 1H time-frame shows a market with persistent bearish momentum. The RSI reading has held below 60 and has been able to tag 30. Price action continues to make lower highs and lows. The 5/9 European session saw equities fall, and Spanish yields surged, with 10-year notes pushing above 6.00% see in the daily time-frame below. This represents risk aversion and reflects the markets weighing on the euro.
Source: Bloomberg 9:05AM EDT
EUR/USD 1H chart 5/9/20129:25AM EDT
Combined with the uncertainty of the Greek election and the relationship of the newly elected French president Hollande with German chancellor Merkel, these factors provided for the EUR/USD to hold below 1.30, and to break below 1.2950 heading into the 5/9 US session. The RSI reading in the 1H chart continues to reflect persistent bearish momentum.
The daily chart shows the next pivot being around 1.2870. This area was support on 12/29, then resistance 1/13, and support again 1/20 and 1/23. With consideration of a bearish market development, any bullish outlook from this pivot should be limited to 1.30. If the market indeed holds below 1.30, our bearish outlook might not be over. The 1.2625-1.2670 2012 lows could be in sight.
There will be a meeting between Hollande and Merkel tomorrow. Hollande is a leftist and expected to fight the German-lead austerity measures, where Sarkozy (ex-French president) was more agreeable with Merkel. If the market sees their differences being another barrier to solving the Eurozone debt crisis, the EUR/USD can open up 1.2625-1.2670 without significant correction from the 1.2870 pivot.
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.