Is the Bounce Back in the Euro Over?

• Posted by Robert Sinn
• on June 21st, 2012

Three weeks ago the short euro/long dollar ($EURUSD) trade reached a frenzied extreme as EUR/USD fell as low as 1.2287 on June 1st. Since that day we have seen a nearly 500 pip bounce in the most important currency pair on earth as speculative interest in euro futures ($6E_F) moved less short over the last two weeks – a trend which likely continued during the first half of this week:

 

EUR/USD now finds itself wedged between some key levels as it tries to find its next direction:

 

The January low at 1.2624 is still an important reference point while 1.2750 has recently offered resistance with a much bigger area of potential resistance above between 1.2810-1.2825. My friend Jonathan Eliasof offered the following excellent analysis of the current situation in EUR/USD this morning:

“We favor a revival in dollar strength heading into the weekend given technical exhaustion, and more importantly the buck’s inability to sustain losses following yesterday’s rate decision.  We will look for downside breakouts throughout the xyz/USD spectrum to confirm our bias as further meltup remains possible.”

Pattern Traders – “Euro Approaching Major Inflection Point”

 

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