DailyFX Analysts Were Bearish on the Euro before Ireland’s Issues Heightened, Where Do They Stand Now?

DailyFX analysts have been calling for Euro weakness since October and before the issues in Ireland heightened. Rising Irish yields forced the E.U. to rescue another troubled member as Ireland was forced to follow Greece’s lead and accept aid along with harsh austerity measures. Will the region’s troubles persist and continue to drab on the single currency?

The question for trader is whether markets will now turn their focus to Portugal and force the E.U. to come to the aid of another member. Germany has already insisted that the European Financial Stability Facility (EFSF) close in mid-2013, defining the window of opportunity for beleaguered continues to seek aid. Chancellor Merkel is also calling for provision to be put in place in future debt offerings that call for bondholders to share the risks. Markets could respond by shunning debt offerings from the other troubled countries reigniting concerns and further weighing on the Euro.

Charts created using Strategy Trader– Prepared by John Rivera

The majority of DailyFX analysts continue to hold a bearish Euro outlook with five recommending staying short the EUR/USD this past week. Outside the fundamental case a technical one is also developing as the pair is breaking below the 38.2% Fibo of 1.1875-1.4281. If we saw a hold there then one could argue that the bullish trend remains intact and further upside risks remain. The 100-Day SMA at 1.3287 could prove formidable and if it should fall it would further validate the bearish outlook and increase downside risks to 1.3000.

Prepared by John Rivera