Lots of profit taking occurring early this week after the last two weeks saw heavy selling pressure on the EUR/USD. We had an alligator crossover during New York’s afternoon session on Monday which signaled a 120 pip rise in the currency pair. We had good news from both the Euro zone and the US, so the uptrend remained subdued but steady until today. That’s when the weekly R1 was met, along with my envelopes and slower MA’s all combining to signal a sell off that’s lasted through the New York session, bringing this currency back down to the lower 1.3900′s as I type. Not only that but my alligator has also signaled that a reversal of the uptrend has occurred. This recent change in price action can be contributed to several fundamental forces including rumors of a Spanish sovereign debt downgrade, Greek government uncovered a further EUR 40 bln in government debt, making its debt to GDP picture that much uglier, and then US ADP (a precursor to this Friday’s NFP) came in much better than expected. But a word of caution, Bloomberg is reporting that: The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time.
In the meantime I am still short the EUR/USD since this morning’s developments both technically and fundamentally still point this currency back in the direction of it’s current main trend.
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