EUR/USD will be the focus of everyone in the Forex world when markets open back up for trading in Asia on Monday. This pair is without a doubt the one that will either make a lot of money for everyone, or send a lot of people into the doldrums.
The Greek people vote on Sunday and the direction of this pair will depend a lot on those elections it seems. However, we have seen a bit of jawboning by a couple of central banks on Thursday in order to calm the markets. This could have a situation where it is simply a win-win market for the Euro at the moment. As bearish as I am on the Euro and its future, I think that the likelihood of a gap up at the open is very high. Because of this, I am no longer short of this pair, and will remain either long or flat for the immediate future.
The trend is still down, but the bounce that has been needed in this market could happen very quickly. If the market believes that the central bankers will be there to hold their collective hands, there will be a “risk on” rally. However, every time this happens, it has less and less of a lasting effect. I think this time will be no different.
1.30 should be the ceiling
The ceiling in this pair is 1.30 in my estimation, as there are plenty of issues around the European Union to be concerned with. Italy and Spain have the potential to be much more destructive than Greece, and it is because of this that I think it is only a matter of time before traders start to ask questions about the Euro again.
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Because of this, I am looking for the simplest and more obvious level from which to sell in the longer-term. 1.30 most certainly fills that description, and as a result I am paying a lot of attention to it. I do think a pop is coming though, and as such wouldn’t dare sell the Euro at these levels. Patience will be key to making money in this market.