Quote of the day: “Think like a man of action, act like a man of thought” – Henri Bergson
Good day all. The euro is up across the board as European leaders eased the terms of loans for countries in trouble and expanded the aid for Greece. In case you missed it – yesterday I shared a few links to relevant articles on this week’s most important topic. Now that the EUR is back into the north territory to retest the resistance trendline connecting previous tops, the dollar index is facing difficulties since it breached below corresponding resistance – see my recent post on this matter / USD index chart below.
What does that mean for the EURUSD? – Well, it appears that EUR is lagging behind USD index a bit, probably because of USDJPY which continues to threaten recent bottom and just fell below 78.70/00 support zone yesterday, thus adding more weight on the dollar index. Should the EURUSD follow the dollar index’s breakdown, then a break above 1.44 towards 1.45 is just around the corner.
Frankly, I am expecting the breakout to occur within the next trading sessions although I feel bearish in the mid-term, suspecting that the ongoing recovery is transitory. But since I don’t make trades based on what I feel or what I expect, therefore I don’t try to outsmart the market by going against it, I’d rather look for some buying opportunities especially in other EUR pairs – EURJPY and EURCHF being two of them, as noted yesterday. When it hits the fan, I’ll make sure to switch side as soon as possible, but until then – positive momentum looks quite strong. The German Ifo Business Climate is the most important event in the FX Calendar today.
Trading strategy: considering buying opportunities either on pullback to 1.4230/50 with an initial stop at 1.4170 (0.5% risk), or at 1.4425 on renewed strength, with a stop at 1.4365 and an open target
Support: 1.4330/50, 1.4250, 1.4200, 1.4150 and 1.4100
Resistance: 1.4420/50, 1.4500 and 1.4600 and 1.4700
Market sentiment: long term – mixed, medium term – bullish, short term – bullish, intraday – bullish