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:
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.