By: Christopher Lewis
The EUR/USD pair continues to trade on the latest rumor and headline that comes out. The Thursday session proved to be no different as the rumors of the European Central Bank swapping out short term Greek debt for long term Greek debt come out on the various wires. The pair reacted as one would have expected – with Euro bullishness as this move would allow the Greeks to get out of at least some of their debt for the time being. It should be noted that the story has yet to be confirmed, and as a result it is very possible that a denial will come out – and this would undoubtedly reverse this move.
The timing of the rumor seems a bit convenient, so whether or not it is real will remain to be seen as the pair was breaking through the 1.30 support area when this news hit the wires. There have been many false rumors and stories that have come out about the Europeans lately, so in reality this kind of trading can be very dangerous as a system.
In the nick of time
The fact that the rumor came out as the pair was approaching a break of the support level isn’t necessarily lost on me, so to be honest I don’t know what to make of it. However, there are some obvious things that I see on this chart currently.
.png "EUR/USD Daily 2/17/12")
The 1.30 level is obviously supportive, and I believe it goes down to the 1.29 level at this time. The resistance area is roughly at the 1.3250 level, and is in concert with the 38.2% Fibonacci level being there as well as the 100 day EMA. Because of this, it looks pretty solid, and I think it will continue to fight the bulls. Quite frankly, I think this will keep us in this area for the short term future.
The support obviously looks like it wants to hold, and until some kind of resolution by the EU, IMF, and Greece gets done, this area is more than likely going to be where we find ourselves in this pair. I have a bearish overall outlook for the Euro going forward, but the levels seem fairly obvious at this point.