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Bullish correction on Euro pairs continued from our technical analysis yesterday. Fundamentally, prospect of fresh money injections from International Monetary Fund raised hopes, as well as successful debt auctions in Germany and Portugal bounced the market up.

Let’s quickly look at EURUSD daily chart:

Daily Forex Signals (click to enlarge)

EURUSD is edging towards the key decision area at 1.2900. This is where we can expect bears and bulls to play it out to gain control. This area also brings some opportunity to get into some good long term trades.

News calendar looks busy dominated by three key news items from US. We have Building Permits, Core CPI m/m and Unemployment Claims later in the day. Needless to say, keep an eye and avoid opening news trades close to these news items.

Forex Trading Signal : Primary trade is to look for short opportunities around 1.2900-10 area.

In case of strong upside movement, wait for breakout and close above 1.2900 and then enter long trades (secondary trade).

After a long bearish move Euro is finally looking to correct itself, at least that what the technical analysis is pointing at. Though, market participants are cautious to see if the effect of S&P downgrade of Euro zone countries last week has already been priced in. If not, that there could be further downward move to come later this week.

Let’s quickly look at EURUSD daily chart:

Daily Forex Signals (click to enlarge)

By the looks of it EURUSD could rise up towards the upper Trendline at around 1.2900. If it manages to break and close above this Trendline then we can confidently start to look for long trades. Until that happens it is better to stay with the recent downtrend and look for opportunities to short especially around 1.2900. Risk seeking traders can go also look for longs until 1.2900

Later in the day we have US Producer Price Index numbers due out. Keep an eye these numbers as recently positive data has started to come out from US.

Forex Trading Signal : Primary trade is to look for opportunities to short and stay with the downtrend.

In case of strong upside movement, look for longs until 1.2900 (secondary trade). At this point reverse and look for shorts again.