EUR/USD had a negative session on Thursday, as the market sold off risk related assets in general. However, we are still above the 1.25 level and this does bode at least somewhat well for the Euro. The area is a significant one, mainly because of the "large round number" aspect of the number, and as such a lot of traders will be paying attention to it.
With the Federal Reserve Chairman Ben Bernanke giving a speech in Wyoming later today, there is a real chance that the market could be moved by what he says or does not say. With this in mind, it will be important to pay attention to the daily close as the expectations for quantitative easing are somewhat mixed.
It should also be noted that we are currently in an up trending channel in this pair, but overall in a down trending market. I still believe that the downside is the way we will and going, and the 1.24 level is the gateway to much lower prices. If we can manage to close below that level, I would be very aggressively short of this market.
10 AM New York time
The Bernanke speech at Jackson Hole will certainly set the tone for the markets today. Because of this, we may see a relatively quiet session during Asian and European markets. However, as the world awaits his speech, there is a chance that some traders will try to cover their positions ahead of the weekend. In fact, that appears to be what happened in the stock markets late Thursday.
I believe that in order to go along of this pair, we would almost have to have a promise of quantitative easing by the Federal Reserve Chairman as I see a ton of noise above the current level. I have stated for several weeks now that I see a lot of noise and resistance all the way up to the 1.27 level. With this in mind, I would need to see a daily close above that handle in order to go long. Remember, no matter what the Americans plan on doing, there is still a major problem in Europe. That has not been addressed by any stretch of imagination.