Is Now a Good time to sell the Euro/US Dollar? 3 Pros and Cons
The Euro has surged to fresh 4-month highs as the Dow Jones FXCM Dollar Index plummets. The currency now trades at critical support and may represent a trade opportunity, but is now a good time to go short?
Pros in favor of Euro/US Dollar short position:
Euro is likely to consolidate and less likely to break significantly higher ahead of critical ESM vote
Yesterday’s Euro/US Dollar inside day was reminiscent of the October, 2011 top
Cons against Euro/US Dollar short position:
Euro rally likely a function of short-covering, could continue as traders limit risk ahead of ESM vote
Dow Jones FXCM Dollar Index takes a beating and the Euro eyes $1.2904
Retail trading crowds heavily net-short EURUSD, contrarian buy signal
Source: FXCM MarketScope
Ultimately tomorrow’s critical German Constitutional Court decision on the European Stability Mechanism could decide direction in the Euro/US Dollar. Until then, we see considerable uncertainty in EURUSD price action.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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