The EUR/USD pair initially fell during the session on Thursday, but found enough support below to turn things back around and form a fairly positive candle. However, we recognize that the 1.10 level above is massive in its resistance, so we are not necessarily too excited about this move but rather look at it as a potential opportunity to find value in this pair to start selling yet again. After all, the US dollar continues to remain strong, and although the last couple of days have not been kind to it, in the big scheme of things this has only been a small bounce. Because of this, we remain bearish but recognize that some short-term traders may find the opportunity to go long in the meantime. However, with the downtrend been a strong as it is keep in mind that it’s going to take very little to push this market back down as most people would probably be fairly concerned about owning the Euro at this point in time.
There are still problems in Greece, and the European Central Bank continues to flood the markets with liquidity. Because of this, it’s probably only a matter of time before the Euro loses value anyway, so the smart money is waiting for resistive candle to start selling especially if we get it near the 1.10 handle. We could be forming some type of the range here, and that would not be unheard-of obviously. We believe that the downside is the easier way to take, so one alternative would be to play smaller positions for shorter-term bullish trades, than the larger longer-term very straight. Quite frankly, the US dollar is struggling in the US Dollar Index at the 100 level, which of course is expected as it is such a large, round, psychologically significant number.
European drama continues to push the market around, and we think that the Euro will continue to suffer given enough time. We have no interest whatsoever in trying to fight the trend for any real length of time, so we remain bearish overall but with the occasional countertrend trade being possible.