EUR/USD Forecast May 16, 2012, Technical Analysis

The EUR/USD pair continued to fall on Tuesday as the markets worry about the various problems facing Europe. The breakdown over the last couple of weeks has been brutal, and there shouldn’t be much of a debate on what direction the trend is heading in the meantime. The banks are a serious area of concern on the continent, and there are reports that over 900 billion Dollars was withdrawn out of Greek banks in the recent weeks. In other words, we may be seeing a bit of a run on the banks in at least that country.

The European Union has several different bearish factors going on at the same time now, and as the markets cannot stand uncertainty, it isn’t a surprise that the traders out there are leaving the Euro and heading towards the Dollar. Treasury yields in the United States are going lower and showing no real signs of letting up. In other words, fear is back in the markets and people are buying Dollars.

The pair should continue to be the focus of most Forex traders, and the triangle that we had been in suggested that we could fall all the way down to the 1.25 level. The 1.26 level does have a swing low at it though, so there is a real chance that the 1.26 handle could offer a bit of a bounce. At this point though, there shouldn’t be any doubt as to whether or not you should be selling bounces – you should, but the headlines will more than likely be the driver of this pair overall. The headline risks are out there, and negative ones seems to be the ones that so many other traders are focusing on.

The buying of this market simply cannot be done as the move has been so clear and concise. The 1.30 level should continue to be important – but this time as the “ceiling” in this pair. We are ready to sell signs of weakness on rallies such as short-term shooting stars and fresh lows as we continue to fall.

EUR/USD Forecast May 16, 2012, Technical Analysis

Written by FX Empire