The Euro rebounds despite slow inflation data
The Euro has been performing rather well today even in the aftermath of a lower than expected inflation number from the single currency area. The number was expected to show growth of 0.6%, however it disappointed with a small adjustment to the downside coming out at 0.5%. After dropping sharply lower in the aftermath, the Euro has rebounded to test 1.38 as of writing.
We will favor buying calls for the last day of the month but only after the pair drops a bit to test the downside again around 1.3780. In case it drops further to test and close on an hourly basis below 1.3750 we would go as far as to revers our call. For now however we remain bullish and are waiting for a good opportunity to enter the market.
With the performance of the Euro being rather bleak last week, we are seeing it coming back slowly to test the range highs. Despite the fact that there is no inflation threat from the Euro Zone, the market doesn't see the European Central Bank act in any meaningful way for now. Before we see a further set of action another slowdown in the Economic data must come to the fray.
As geopolitical challenges are mildly dissipating we can reassert the Euro's appeal as a strong currency with countries that are reducing their deficits. That however is not the case! French elections over the weekend have proven that policies of the current government are failing as the right parties have dealt a serious blow to current Socialist government.
As we look at the charts there are some key developments that could trigger a substantial move. Lets first look to the upside. The EUR/USD binary options forex pair has probed the upside coming to test above 1.38, reaching 1.3805 before retracting at current levels around 1.3890. If we see a sustained close above 1.38 we could be in for a full reversal, taking prices to test 1.3850 initially and 1.3950 consequently if successful.
The downside remains supported from Friday's low just above 1.37 - at 1.3705. There is not much scope to believe that will be retested as of now, unless we see a hawkish Janet Yelen this afternoon as she speaks at 13:55 GMT. The main numbers will be released later in the week, so keep an eye out for any surprises.
Meanwhile we are maintaining a bullish stance and will buy daily calls for today's expiration as the price drifts lower to test 1.3770-80. Unless there is any meaningful news, the trade should be safe enough. Stay tuned to our forecasts this week as we come back in full fray to cover the hot binary options forex market.