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EUR/USD Forecast 12/02/2014

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EUR/USD Chart 12 Feb 2014
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The Euro has tried to pull off a nice rally, only to hit serious resistance around 1.3680

The Euro has attempted to stage a steady rally towards 1.37. However once we have reached offers around 1.3680 the pair was knocked down as market players realized that Janet Yellen's testimony in front of congress was not in any substantial way negative for the US dollar. We look for levels to buy daily puts.

As we have mentioned this failure at the top of the daily range has tilted our bias to the downside. In order to verify our put buying idea we will need to see a test below 1.3620. If we see an hourly close below this level we will buy daily puts.

It all will be dependent on key data on Thursday and Friday, however do not underestimate the impact of the Chinese data which will be released in a couple of hours. It is quite possible that we see some sort of consolidation effort before we jump back on the bandwagon in any direction.

As we have seen in trading today the market seems heavy above 1.3675. There might be many sellers there that are protecting their stop orders trying to push prices lower. The biggest advantage will come to those who can afford to wait long enough to pick a clear direction.

If we see only minor breaches of the range tomorrow, we would sit on the sidelines and make a move on any big news or some sort of technical levels breach. As we like to say - better safe than sorry!

To set a new course we will be focusing our attention on a couple of key areas. We have already identified the downside, so what remains is to inform you about the resistance levels on the topside. You guessed it right - the top from Tuesday holds the key to 1.37 and above.

Despite the fact that we do not find it very likely to occur, we can certainly say that a break above 1.3680 will cause us to switch to the upside and buy daily calls. If we don't see big action today, Thursday will be the deciding time for this trade - stay tuned to our forecasts.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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