EUR/USD fell yet again on Thursday as the fears of traders continue to push this pair much lower. The reality is that there is a serious chance of Greece leaving the European Union now, and this has a lot of traders on edge. The banks in Greece are being emptied at a rapid rate as the populace doesn’t trust them now. The possibility of default seems to be almost a certainty sooner or later now, and this has money flowing out of Europe and into the United States in massive amounts.
Greece received another downgrade to imminent default during the session by another credit rating agency, and the Bank of Canada come out and expressed weak growth expectations for the global economy as well. The ratings agency downgraded Spanish banks as well during the session, and this will only compound the fears and concerns of things going on in the EU.
The hammer from the Wednesday session suggested that we were looking for support, but the price action for the Thursday session was horrible. There seems to still be downward pressure in this pair, and with the continuing concern in the area we could see lower prices. To be honest, the descending triangle above the 1.30 level measured a move down to the 1.25 level, and we nothing to suggest that the pair will be a buy. The 1.26 level could offer support as well, as the area was the spot of the bounce to above the 1.30 level, and we would have to think that the area will cause some kind of reaction.
The headline risk out there should continue to be a real possible problem for the bulls. Granted, there is a lot of bad news priced into the market, but the fact is that there are probably a lot of different shoes to fall in this market. The pair looks to continue lower overall in our opinion, and the bounces that come will more than likely be a selling opportunity.
The daily candle from the Thursday session broke below the lows of the Wednesday hammer, and this is a very bearish sign. At one point in time during the session, the pair looked as if it was going to print another hammer, but late in the day we saw selling which is never a good sign. The pair will be a sell until we get well above the 1.33 level, and as a result we sell rallies that fail, preferably as they approach the “round numbers” on the charts.
With the ongoing struggles in Greece as far as the political arena, there is going to be a lot of headlines that will rock this market back and forth. The elections in June will need to be out of the way for the markets to feel comfortable with the Greek scenario, and the fact is that the politicians that are pro-austerity are probably going to lose more seats. With this in mind, it is no longer a matter of if Greece leaves the EU, but when.
Written by FX Empire