EUR/USD Forecast June 4, 2012, Technical Analysis

The EUR/USD pair got a bit of a boost during the session on the bad jobs numbers out of America. This seems to be predicated on the idea that the Federal Reserve could forced to step in and ease further. However, the idea is more than likely a bit premature, and there is also a really large chance that the European Central Bank will have to ease first. Also, there is a much more structural risk in Europe at this moment, so this knee-jerk reaction on Friday will more than likely be just that: a knee-jerk reaction.

The 1.25 level is above, and as a result there is a resistance level in the area. The level should end up being strong, and because of this we are looking for failures in this area on rallies. The market is far ahead of itself on the idea of easing, and a repudiation of this by Bernanke during Congressional testimony the coming week will slam this pair if it happens.

With all of the headline risks that we see in Europe at the moment, it is very difficult to buy the Euro in general. It is because of this that if we choose to short the Dollar, it won’t be in this pair. The European Union has several years of pain ahead of it, and to think that this suddenly changed is naïve at best.

The breaking of the 1.25 level would indeed be interesting, but there are also resistive areas at 1.26, 1.27, and most certainly at the 1.30 level. The four areas just mentioned all look like candidates for shorting if we get the weak candle that we need to see in those areas. The pair still will be subject to sudden headlines that will affect prices, and we think most of those headlines are going to be Euro negative. The Greek elections on June 17 will continue to be a weight on the pair. The buying of this pair just isn’t possible in this environment until we get more clarity as this market is so distressed.

EUR/USD Forecast June 4, 2012, Technical Analysis

Written by FX Empire