Where now for the Euro/USD

Having hit a low of 1.1870, the Euro has climbed it’s way out of the black hole, steadily and with immense gusto. It’s now in it’s 7th week of steady rises, gone are the worries about the PIIGS (Portugal, Ireland, Italy, Greece and Spain). Europe as Europhiles see it, is on the mend and the Euro is being pushed up at a dizzy pace. Right now it is stalling at the 61.8% Fibonacci retracement of the great and fast fall from 1.3680 area to the 1.1870 area. The 61.8% area is at 1.30 and if this barrier is broken, next support is at the 200 MA around 1.32, and a penetration of that takes us to 1.3250 which is the 76.4% retracement.
Fundamentally, US figures continue to disappoint with equities also swinging crazily in thin summer trading. It will therefore be interesting to see if the Euro can reach 1.32 and if it does if it continues to new highs. A lot will depend on news flow from Europe, although right now it seems like Euro love is back big time.

Should the Euro fail here, then a revisit of the lows is not only possible, but will provide further impetus to a move down to parity. With summer trading and thin volumes, this market is best traded with caution.

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