The EUR/USD pair continued to fall during the Thursday session, but not without a serious attempt to rally. The Euro got a bit of a lift on a rumor that the International Monetary Fund was talking with the government Spain about a possible bailout loan. The Spanish denied this report, and the IMF said that any discussions regarding Spain were internal at this point, and this swatted the value of the Euro back down to reality.
The Euro zone continues to see a lot of different problems at one time, and the biggest of them is the rates that several countries are paying at the moment as creditors demand more of a yield from them. The Spanish, Italians, Portuguese, and Greeks are all paying massive amounts of interest at this point, and the problems seems to be getting worse on this front.
The Euro will be heavily influenced by headlines going forward, but the reality is that until the Greeks have their election on June 17, the markets are going to be in a more “risk off” mode, and this will continue to weigh upon this pair in the meantime. The concerns of Greece voting for an anti-bailout party could cause a massive headache and huge contagion risk in the European Union are very real at this point, as the vote is pretty much split in half at this point. The Greek election is one of the biggest economic announcements this year in the Forex world.
The daily candle for Thursday is a shooting star at the bottom of the recent plunge in this pair, and this suggests that we are going to see further weakness in this market. The 1.23 level seems to be the next level to attack by the sellers, and we still think 1.21 is eventually seen. We are selling all rallies at this point, and the Non-Farm Payroll numbers coming out later today could possibly have an effect on this pair. In many ways, this is a one-way move as the numbers coming out weak will continue the “risk off” trade as people plow into Treasuries. This will push the pair lower. However, if the number is good there is a good chance that traders will simply elect to buy Dollars as well, as it gets them out of Europe and into an economy that is trying to expand.
Written by FX Empire