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Yesterday’s Forex Signal was kicked in towards the short side. We saw price move right to the key support area we highlighted.

On the fundamental side, the reason for decline was Italy’s Bond yield which rose over the critical 7% level to 7.1%. Anything beyond 7% is considered unsustainable for government borrowing.

Let’s quickly look at EURUSD daily chart:

We saw the key area 1.3500 which was tested yesterday and then later broke today in early Asian session. If price manages to close below the Trendline and 1.3500 we can expect further downside movement to come.

Market will be watching Core CPI numbers due out from US later in the day.

Forex Trading Signal : Look for longs if price manages to move above the rising Trendline. Alternatively stay with trend and look for short below the 1.3500 area.

Yesterday we expected market to continue the rally which started at the end of last week, however market participants had totally different plan.

Euro gave away the gains as fear that the Euro zone was moving slowly into recession overcame the optimism created by newly elected leaders in Italy and Greece. Whenever there are uncertain times, US dollar turns out to be a winner.

Let’s quickly look at EURUSD daily chart:

 
Price moved lower yesterday and now looking to head back to the key area which is the low of the range on daily chart and also where the rising Trendline comes into play. Watch out for 1.3540-20 area, this is where we will see bears and bulls fighting it out to take control.

Today we have important economic news items from both Europe and US, which will impact the market as the day progresses.

Forex Trading Signal : Look for shorts below the 1.3500 area after a clean Breakout. At the same time look for reasons to enter long on price rejecting this area.