By: Christopher Lewis
The EUR/USD continues to be driven by the latest headlines, and Friday proved to be more of the same. The Spanish were kind enough to provide the fireworks this time, noting that they will not meet agreed upon austerity measures. This drove the pair down, and as the day wore on, the Euro lost value.
The 1.35 level looks as if it is the current “top” in the market. The 1.3250 level gave way during the session, and the 1.30 level looks to be support below that. With the current back and forth nature of the pair, it makes sense that the pair will have issues gaining traction in either direction and the headlines will continue to cause the sudden movements that have chopped up so many trading accounts.
EUR/USD Technicals
The 200 day EMA was just above the recent highs at the 1.35 level, and this held true as the trend traders jumped in on the short side. The 50% Fibonacci level also held firm as the sellers reacted to it. The area is always going to be a natural place to see a reaction, and with the combination of the Fibo level, the 1.35 round number, and the 200 day EMA, it was probably always going to be difficult for the bulls to continue to push the pair higher. With the recent bullishness, it was always going to need a rest, and it appears that we got that in spades.
.png "EUR/USD Daily 3/5/12")
The pair going forward will continue to struggle with random headlines, and while it has been considered to be one of the more “reliable” ones in the past that is all but a distant memory. In fact, there was a time when a lot of my trader friends would avoid the GBP/JPY pair because it acted like this one! The structure of this pair is changing, and choppiness will be the new norm I am afraid. With that being said, I suspect we will chop around between the 1.30 and 1.35 handles for some time. I am going to be playing this pair as a range bound trade until we get out of this area.