By: Christopher Lewis
The Greek Parliament voted in favor of austerity in the early part of the Asian session on Monday in order to receive the next tranche of bailout money. The pair has been volatile over the last year or so on these issues, which quite frankly, started even sooner than that. The moves have been very erratic, and I dare venture to say that a lot of new traders have been sent packing by the “safe pair” that so many of the experts suggest as a great starting point in the Forex world. Over the last several months, this pair seems to have gone schizophrenic, and as a result has been aggravating to say the least.
It is against this backdrop that the initial surge in the pair on Monday as a response to this “good news” has failed. It is perhaps to remind the markets that there are many issues in Europe, and not just Greek debt. In fact, there are now whispers of restricting Portuguese debt as well. This then will beg the question, “If Greek gets a deal, what about the others?” I believe this could be the question that Portugal and Ireland might ask soon.
The fact that the pair failed to hold its gains certainly should be worrying to the bulls going forward. There is the Finance Ministers meeting on Wednesday to approve the austerity package by the EU, but on what planet will the EU reject it? If they do, they might as well dissolve the Euro right now. This is very, very unlikely.
38.2% holds
While the stock markets were excited about Greece, the Euro itself failed at the 1.3250 level. This is important because the 38.2% Fibonacci level is at this level, and it looks as if we held. The 100 day EMA has acted as resistance, and it looks as the market is ready to continue later. Italy, Portugal, and Spain have been downgraded by Moody’s, and it appears we are ready to fall. A break of the bottom of the Monday session lows should have us looking for 1.30 as support.
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