Article originally published on innerfx.com and republished here with permission
“Doubt is not a pleasant condition, but certainty is absurd.” ~ Voltaire
Good morning. A fresh multi-month low has been reached by EUR against USD at $1.2665 before pulling back to $.12720 at time of writing. Angela Merkel and Nicolas Sarkozy meet today in Berlin to finalise a deal to increase fiscal coordination and discuss ways to boost growth in euro zone states in order to overcome the sovereign debt crisis.
The dollar is trading comfortably in the 81 area after last week’s rally. Dips are likely to be well supported as more buyers are probably waiting to see bids in the 80.50-81.00 region.
Seems that a minor correction is underway. First decent resistance zone is seen between 1.2850 and 1.29.
Latest COT reports show record short EUR bias
Things are getting uglier for AUD – the main risk barometer, as stocks declined despite a strong NFP number on Friday. Although the recovery is losing steam, there’s still a good chance that it is corrective, hence I wouldn’t sell right now but rather lower – on a potential break of 78 which is an interim support
Dollar is pulling back after a strong rally, but uptrend remains intact – so it’s probably best to look for fresh buying opportunities while it holds above .9500
I know it’s not the best idea to buy EUR nowadays, but AUD is more sensitive to risk so a break above 1.25 should be an easy ride if stocks are likely to decline more. Buying on the break above 1.2500 is a scenario to consider