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The EUR/USD pair fell during the session on Tuesday as the Euro lost a little bit of its luster in the eyes of investors around the world. The 1.30 level looks like it could provide support though, and as such we will have to pay attention to this market at that area. We also see quite a bit of support at the 1.28 level, and as such would buy a supportive candle at that area.
If we managed close below the 1.28 level, we think this market does much lower. We essentially have a couple different trade lighting up, which of course would include selling on a daily close below 1.30 with the understanding that 1.28 would probably be as far as you go. Another trade would be to Bonnie the bounce at the 1.28 level, as well as buying a bounce at the 1.30 level. Either way, you have support in the does suggest that you should be long of the Euro. And as we stated before, 1.28 is the "line in the sand" that differentiates between a longer-term sell position, and just a simple and quick trade.
The biggest problem trading this pair right now is the fact that the fundamentals don't really favor either currency. Obviously, there are a lot of problems in Europe right now that the entire world is aware of. Nonetheless they do seem to be willing to ignore them for the short-term. On the other side of the Atlantic, we have a Federal Reserve that is willing to throw or even print as much money as humanly possible at the market to hope something sticks.
Neither one of these currencies is particularly attractive now because of this, and to be honest we believe that both of them will probably suffer against commodity currencies. If this is the case, we feel that this cross may be a bit difficult to trade. Obviously, the recent move is fairly parabolic so a pullback should be coming, but we need to see a continuation of the downside in order to participate.