The Euro is taking a breather before next direction is taken
As the Euro was hit by verbal intervention from the side of ECB officials over the weekend, it has recovered somewhat and the market does not seem to believe that the ECB will act to stem the exchange rate rise at this point in time. If history is any guide however, the ECB has been quite active at times to vigorously announce some measure to curb the excessive exchange rate rise.
The Euro has widely diverged from its projected path of depreciation voiced by the majority of market players for a second year in a row, and it is miraculously defying gravity by possibly having another look at 1.40 in the coming weeks. However the main reason for a rise this time might be an excessive bearishness on it.
Long term market participants know that sometimes currencies seem to be defying gravity for much longer than one can remain solvent, and have enough money it his/her account to take yet another bearish position on the currency that is "supposed" to go down in value. So what will be the conclusion of the sage this time around?
As we look at the EUR/USD charts today, the single European currency has taken another round higher to trade in the mid 1.38's. There is a substantial technical hurdle for the price on the upside which is situated around 1.3850, and we would be buying calls only in case that the price probes higher and closes higher on a daily basis above that level.
On the downside we are seeing a round of support currently residing in the 1.3815 area. Since there are no other major hurdles for the price to go lower, we are of the opinion that if this level gets broken on a sustained hourly basis, we would be gladly being daily puts for today's expiry in the EUR/USD binary options forex pair.
Rest assured that some volatility might be possible, as we are entering a long weekend in Europe (US trading will be intact tomorrow) so be prepared to act swiftly should any substantial difference in prices occurs - take a position while you can in other words.
the main data points to look at today are related to the US calendar with weekly jobless claims taking the center stage at 12:30 GMT (expected at 315,000), while the more important manufacturing number from the Philadelphia region will be released at 14:00 GMT (expected at 10 points).