For most part of the day yesterday, the EUR/USD pair showed strength, even as the Euro zone was besieged by a wide range of negative economic information that range from PPI to CPI, according to forex news today. Germany was the only one to post a positive report for the day. However, the German ZEW took a tumble with the only bright spot being the slight ping hike in the Euro zone industrial production.
On the other hand, across the globe, the US released a handful of positive economic data that range from a surprisingly high retail sales numbers to encouraging figures for PPI and Core on a year over year, and month over month basis. Because the markets were focused on the eco data today, the green buck was able to gain significant headway.
The currency pair tried to mount a rally on Tuesday. However, it fell short of expectations and instead formed a shooting star in forex charts. As suggested by the shooting star, it may be a good idea to take the underside of the wedge on the rise or the uptrend line for the following sessions. If that particular area gives way, there will be no reason to doubt why the EUR/USD will not succeed in retesting the lows.
As far as the Euro is concerned it is very difficult to be bullish at the moment as there currently are a lot of problems in the area, if one is to believe the latest forex news. Although the currency is expected to recover, nothing much is expected in the next few days. Recently, the 1.2350 level has assumed the dual role of support and resistance. And for those who failed to stay over it for the second consecutive day, it will be a good move to only sell this pair.
Keeping that in mind, it is therefore recommended to wait for the best opportunity to do so. A good sign to begin selling is the break on the Tuesday lows. That should be sufficient. You may however, prefer to hold on to the trade pending the up trending line break of the climbing wedge.
That being said, the moment liquidity returns to the market, you can expect to see where the market is really leading to. As it is the height of vacation season, the climb may tend to be a little overstated. This is one of the main reasons why according to current forex news, the Euro is expected to continue its decline in value for the next couple of months, or even towards the latter part of the year.
Since hitting the bottom about three weeks ago at 1.2042, the currency pair has failed to break out to the upside. At present, the Euro hovers somewhere around the middle of its largest point (1.2242) which is an indication that there is no certainty among investors as to whether the pair is a sell or a buy. Traders are relying on the ECB and the Fed to start new rounds of quantitative easing. However, charts say that these decisions are currently on hold.