The EUR/USD pair has been falling day after day recently, and it was only the 1.25 level that could hold it up. At the end of the session the pair had formed a very bearish candle as the fears out of Europe continue.
The magic word would be “Eurobonds”. If we get this word out of the European leaders, there is a chance that the Euro could rally significantly in the short term. This is because all of the sudden Germany would be backing everyone in the EU, and this would make the periphery suddenly a whole lot more creditworthy. Unfortunately for Germany, it would cause a downgrade on their credit rating. The Germans have been steadfast in standing against the whole idea, as have the Finns and Dutch. There is little chance that the wealthier countries in Europe are going to fall on a financial sword to make the rest better off. This in essence, shows the folly of the whole concept of the Euro.
Shooting star at 1.25
The daily candle for the Thursday session formed a shooting star at the bottom of the recent plunge in this pair, and this is a massively bearish sign. The 1.25 level gives way – and we could see a real pile on as far as the bearish pressure in this market. The Euro certainly isn’t going to be a purchase for the faint of heart, and the situation in that region doesn’t appear to be getting better anytime soon.
Because of the complexities of the problem in the European Union, I simply won’t buy the Euro until it proves itself to me. This means a break above the 1.30 level – something that isn’t going to happen for some time. This doesn’t mean I will always be short of it, just that I won’t buy it.
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The currently candle suggests that the flood gates could open below the lows for the session. I am throwing in the 1.25 level for good measure. The pair certainly has a lot of headwinds, and as a result, even if we break above the top of the daily range for Thursday, this only suggests that I can sell it at a higher level on weakness.