Quote of the day:“Every society clings to a myth by which it lives. Ours is the myth of economic growth. It’s totally at odds with our scientific knowledge of the finite resource base and the fragile ecology on which we all depend for survival.” – Tim Jackson
Good morning. Another day, another round of euro selling across the board. It still holds quite well against the US dollar but things look ugly against other currencies such as CHF, JPY and AUD – these 3 currencies being the best performers against both EUR and USD, so if you look either to protect against the debt mess in US and Euro-zone or want to make a profit, then it’s better to stay away from EURUSD and focus on instruments supported by other factors not only by government
policies kicking the can down the road. The US GDP is today’s most important data release in the FX Calendar
Now let’s look at some charts and discuss potential opportunities
The once-might dollar:
As you can see in the chart above, the dollar is approaching the rising trendline – former support – which is connecting recent higher lows. The test should occur within the next sessions, either today – depending on how the EUR performs (inversely correlated to the USD Index) – or next week – on August 2nd, when Congress is expected to raise the debt ceiling. On long-term basis, the dollar downtrend is almost certain to continue.
Euro looking heavy here, after the false breakout above the resistance trendline. It is currently trading into interim support zone and if it doesn’t hold, then we should expect a new run towards $1.400 – even $1.38.
The breakdown has been quite violent and the pair is quite far below the former support zone, but we’re in a correction cycle and there are two sell zones to consider.
Resistance at 113.50 was such a nice level to consider in case of a breakout, just a few days ago. Well, I guess it has to wait as the euro is walking the stairs down towards the basement – and the light is off!