FX Analysis: Weekly Support Key to Risk Reversal
Littlefish FX | Mar 03, 2013 04:46PM ET
So sequester Friday turned out to be a relative non event, although there were some interesting comments made on the potential US downgrade should the debt ceiling issues remain unresolved.
The COT reports last week provided some real insight into how markets could potentially shape moving forward over the next few weeks.
US Nonfarms due next week as well as some interest rate decisions. Both are unexpected to provide any changes that could spark some interest with wider comments around the events from key speakers.
In genera,l price action is again at key levels, long term trends have been on correctional runs lately. Last week, they threatened to turn from correctional into full blown reversals with the Euro now near key weekly support again. Further drops could result in a full blown risk off mode, especially if the continued uncertainty in Italy and concerns for Spain and France emerge.
EUR/USD
The euro clawed back above the 1.30 level late on Friday, which we were honestly hoping it would be unable to do, although the reality is that majority of this was likely due to profit taking. The pair now sits at major weekly support again. If we find support here we could easily see a move to test recent highs, if these levels fail we could be looking at a much bigger move lower towards 1.2600.
Personal Bias: Bearish (just)
Support: 1.3000
Resistance: 1.3150
Strategy: Still holding short a runner (locked in profit) having booked over 200 pips on initial short, looking for a break of the 1.30 handle to confirm further downside, or a strong rejection to point towards a move higher.
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