The EUR/USD Is Setting Itself to test 1.1400 Again
With the EUR/USD pair failing to test the downside for yet another day, the upside seems to look more likely in the near future. With the pair trading lower towards the 1.1300 area twice during the trading session today, we have seen decent bids emerge on both occasions sending the pair higher.
The EUR/USD has been consolidating in recent sessions with the upside open for a move as the prospects for a deal between the new Greek government and its European creditors are rising. The main factor which can damage the current outlook is some unforeseen risk event which at this point in time seems remote.
Alongside the Greek government, what is very important to know is that the coalition between the ultra leftists and the radical right in Greece hinges on the power of Alexis Tsipras to gather votes for a presidential vote. A supermajority of 180 votes is required in order to manage an election.
This seems to be becoming one of the risk events in the run-up to the negotiations between European creditors and the Greek government. On Wednesday key negotiations are to take place, while Monday's inflation data from the U.S. has proven to be a disappointment.
On the upside we will look for a sustained hourly break above 1.1360 in the EUR/USD binary options pair in order to buy daily calls for the expiry around 21:00 GMT on Tuesday, the 3rd of February. A drop towards 1.1310 would also trigger call buying from our side.
Alternatively if we see a sustained break below 1.1300 we could again see a slide to test 1.1200, however we find this scenario to be less likely at the current juncture due to the many failed attempts for a daily close below the 1.1300 level.