Euro Support Wanes Increasing Downside Risks
The EUR/USD falling below support at 1.3481-61.8% Fibo of 1.2444-1.5149 led me into a short position last week. Ii was prudent not to get bullish on the pair without a break above the 20-Day SMA. I saw potential for a positive reaction to the resolution for the Greek crisis. We have seen that price action develop over the past few days. However, downside risks remain and with the pair failing to break back above the Fibo level a case could be made to ass to any short positions. At this point I wouldn’t even think about getting long until a move above the 50-Day SMA at 1.3712. The pair still looks vulnerable to a collapse to 1.3000. A positive U.S. labor report on Friday could spark risk appetite which has been a driver for the pair. Yet, it could also raise the outlook for U.S. interest rates and generate dollar support. I’m going to stick with my short with the 20-DaySMA at 1.3585 as my stop.
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