The Euro weakened at the start of the week as the SEC’s allegations against Goldman Sachs dampened demand for riskier currencies. The fraud allegations should only have near term reaction as global fundamentals continue to point to a firm recovery.
Greece continues to be the biggest pressure on the single currency as the outlook remains grim. The deficit cuts and measures that need to be implemented by the country seem too harsh and will bring itself further into recession. Being unable to weaken its currency to increase demand, while spending cuts take effect, will be a burden to Greece.
The IMF, EU and Greek emergency meeting that was scheduled to start today in Athens was postponed until Tuesday or Wednesday because of the disruption to air traffic caused by the cloud of ash from an erupting Icelandic volcano. The Euro should remain under pressure until the meeting takes place. Preferred strategy will look to sell on rallies.
Trend:
Weekly : Bearish
Daily: Bearish
Hourly: Bearish
Support & Resistance:
From current levels, 1.3440, the pair finds initial resistance at 1.3521, followed by 1.3551, and 1.3580.
Key support to watch is the 1.3420 where a break of such would open levels to the 1.3383, followed by 1.3350, and 1.3280.
Strategy:
Near term, look to sell on rallies towards the aforementioned resistance levels. Stock performance will also have impact on the pair, while a Bernanke speech may also provide volatility.
