(Figure): Daily chart for EUR/USD
EUR/USD has continued its massive downtrend. The selling pressure has continued in the early morning Asian session which is cause of concern for euro bulls. One of the biggest reasons for the sell off witnessed yesterday was the eurozone inflation data which came in at 0.3 percent lower than the 0.4 percent reported last month. The inflation data sparked deflation fears in the Eurozone.
Traders and investors are worried the stagnation would spread like a contagion to other parts of Europe and would affect the overall growth picture. Traders and investors would be closely watching out for the European Central Bank meeting scheduled on Thursday. Many believe that the central bank would introduce further easing in the form of additional bond buying to kick start the economy, though this measure is seen to be negative for the euro in the near term. Traders would also be focussing on the nonfarm payroll report expected to be released on Friday to understand the underlying strength of the economy.
On the daily charts for the EUR/USD, the currency pair continues to remain below the important daily moving averages. The currency pair is currently finding resistance at $1.26880 and the support on the downside comes at around $1.25850. The momentum indicators for the EUR/USD remain in oversold territory and are showing no signs of a recovery which is a huge cause of concern. The momentum indicators indicate towards underlying negative bias for the currency pair. Traders would be closely looking at the aforementioned resistance zone and believe only a move above the level can send the currency pair higher in the near term.
Short EUR/USD at current levels for an intermediate target at $1.25500 with a strict stop loss above $1.26880
Long EUR/USD only if it closes above $1.26880 with a short term target at $1.27420