The EUR/USD pair went nowhere during the session on Tuesday as we continue to bump along the bottom. The 1.2850 level is significant support as far as we can tell, and as a result we are not ready to start selling this market quite yet. Even though we have this strong move down on Monday, you can see the Tuesday had absolutely no follow through. Interestingly enough though, it should be noted that while the markets had a nice “risk on” feeling to them in general, the Euro could not capitalize.
This is probably because there is now a new concern with Europe. The biggest problem with Europe right now is the fact that they are using the depositors to bail out the banks in Cyprus. With that being the case, we suddenly have to start asking questions of the peripheral countries and whether or not deposit will be protected there in cases of bank failures. There are certainly enough week banks in places like Spain, Portugal, Ireland, and Italy to make traders concerned about the European Union in general. If that’s the case, we may see money flowing into the United States from across the Atlantic Ocean.
After all, during the financial crisis a few years ago, nobody lost money in American banks. We have already seen the US proven itself during the crisis, so it makes sense to think that the ultra-wealthy in Europe might be sending their money over to places like New York. As long as that’s the case, this pair will struggle to go any higher.
We even sell the Euro struggle against the Yen. Granted, the pair did rise during the course of the day, but the pair vastly underperformed all the other yen related ones. This shows just how weak the Euro truly is. Because of this, we certainly wouldn’t buy this market, but since we are sitting on such massive support we suspect that a rally from this point should offer a nice selling opportunity. We are selling rallies as they come, especially near the 1.30 level.
Written by FX Empire