The EUR/USD pair rose slightly during the session on Thursday as the Americans were away on holiday. More importantly though, it found the 1.28 level supportive for the second session a row, and I believe now we are reentering the previous consolidation area that runs all the way up to the 1.3150 level.
If you have been reading my articles, you know I am very bearish of the Euro long term, but simply cannot go against what the charger telling me right now. This chart simply suggests that we will see a continued rise in the euro release for the short-term, and because of this I will not short this pair now.
I see the massive support area between 1.27 and 1.28, and the fact that the 200 day simple moving average is slicing through that area as we speak. This should offer quite a bit of support going forward, and as a result I think it makes sense of this pair rises currently.
Headlines
Think the biggest enemy of the Euro right now will be headlines. They will cross the wire from time to time, and will be detrimental to the value of the Euro in general. Ironically, the US “fiscal cliff” could also throw a lifeline to the US dollar, as people will run into the US Treasuries market if they do fall off that cliff. In a roundabout way it's a bit of perverse logic, but people do buying the US dollar when things go wrong. Just think of the housing crisis in 2008: The epicenter of it was in the United States, yet the US dollar got bought up hand over fist. I believe this is going to happen again in this particular situation. (As a side note, I am starting to read some very interesting analysis on how the FHA will have to be bailed out in the US as well, and this could be much worse than Freddie and Fannie.)
With all this being said, I am going to play this market from the long side over the next couple of sessions, knowing that 1.30 could also be a bit resistive as well. The truth is though, the charts don't lie, price is king, and the markets don't care what I think. With this in mind, I will be long the Euro for a couple of sessions.