The EUR/USD pair had a strong session on Thursday as the Euro came back into favor. The bounce from the supportive range near 1.27 was strong enough to force the price back up to 1.28 during the session. However, the 1.28 handle has acted as resistance yet again, and as such I believe that we are going to see a bit of sideways action in the short-term.
Also of note is the fact that the 100 day exponential moving average is just above price as well. The 1.28 level used to be support for a large consolidation area, but now it should be resistance as we have broken below it. The last two sessions have shown that it is in fact resistive. However, the fact that we close towards the top of the range for Thursday does it make me as confident as I should be in order to start selling.
I believe that the 1.27 to the 1.28 range is roughly the consolidation that will see over the next couple of days. I believe also that we will eventually break lower, and getting below the low from the Tuesday hammer would be a sign to start shorting this market heavily. As far as buying is concerned, I am a bit skeptical but would have to admit a move above the 1.2860 level would be impressive enough for me to start buying the Euro.
European Recession
The Europeans are now in a recession, and it has even reached the borders of France and Germany. Because of this, the Euro should continue to suffer, but the one thing that does offer support is the fact that the Federal Reserve will continue to print US dollars at the same time. In a sense, there is a fight between two central banks right now as to who wants the weaker currency. Because of this, I believe that we will see a lot of choppiness in this pair, and as a result I will more than likely look to sell the Euro against other currencies when the time arises.
