Euro Cross Pick 08.24.2011
As the EUR/USD threatens the bearish patterns, the recent rally in the exchange rate may gather pace as the exchange rate trades back above the 78.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.4440-60. However, as the fundamental outlook for Europe deteriorates, I am still fairly bearish against the single-currency, and the euro-dollar should be carving out a lower top this week as long as prices continue to close below the 78.6% Fib. As the DailyFX Speculative Sentiment Index holds at -2.11, I will stay on the sidelines until the ratio narrows, and we may see the EUR/USD threaten the rebound from 1.3836 as there appears to be an increased reliance on the European Central Bank to balance the risks for the region.
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