Comment: The week starts with euro forming new lows below 1,2760-70 and a move to lower levels is possible.
As we had mentioned in our previous analysis, euro’s sentiment is negative, and the market is expecting further rate cuts, after the unexpected decline in inflation and the negative comments in Davos. Dollar is still a safe haven when investors are insecure, while the latest economic releases could be worse…
This week is full of economic releases, with most important the interest rate announcement from ECB, and Non Farm Payrolls from the US on Friday.
The market expects that Europe’s interest rate will remain unchanged, and that half a million Americans have lost their jobs the last month.
Technically, we are in an oversold area in short term charts (4hour, hourly), but there is no important support before the previous base of 1,2550-80. The area of 1,2780-00 is now turned into a resistance, and 1,2890-2930 area seems to be the higher range for reactions.
Further decline could lead us to 1,2330-50 area, where last year’s lows were formed.
*STRATEGY:
The trend remains bearish and we will follow it until we see reversal signs, or important support is reached.
Sell orders could be tried at 1,2780 and 1,2820 resistance, with stops above 1,2850, while sell orders could also be tried at 1,2890-2910 ,with stops above 1,2980.
Otherwise, buy orders could be tried at 1,2580-80, with stops below 1,2500 and target at 1,2750-70 area.
*The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current condition.
