By: Andrew Keene
Currently the EUR / USD is at 1.3093 with virtually no change for today as it continues to stay in the downward slump that started after the monthly high last Tuesday. Analysts continue to favor the downside as long as the ratio remains under the .5 Fibonacci level (50% retracement of its last bullish spurt at 1.3106). This is the lowest ratio in two weeks ever since the sharp fluctuation of almost 0.03 three weeks ago. The high point in EUR / USD at 1.3662 occurred back in early February with a major 6 monthly low at 1.2779 following in late March.
The Euro finished last week at a two-week low under the stronger USD which rallied high after Bernanke’s announcement that the Fed would hold off on decreasing its monthly bond purchases. Last Friday the Euro suffered due to political and economic disruptions in Greece. In a protest against the shutdown of the state-wide public broadcasting service, the Democratic Left Party withdrew from the government, leaving it with a smaller majority in Parliament. Also, the International Monetary Fund reported that it would not yet stop funding for Greece in response to concerns about the delays in a privatization plan which Greece agreed to last year. These setbacks in the plan could hurt Greece’s chances of making much-needed reforms to secure bailout which could potentially harm the Euro even more.
My Trade: Buying the FXE August 129-127 Put Spread for $.60 debit
Risk: $60 per 1 lot
Reward: $140 per 1 lot
Breakeven; $128.40