The EUR/USD pair fell at the open for the Monday session, but bounced in order to form a hammer at the top of serious support. The support level, which runs from the 1.29 to 1.31 levels, should continue to be the “lift” that this pair has needed. The area has a focal point at 1.30, and as a result it seems that the area is rapidly becoming a major support and resistance cluster.
The pair looks as if it wants to rise a bit, and the recent “voluntary” haircut that the Greek bondholders took should provide a little bit of relief for the Euro, but the long-term structure and outlook for the Euro hasn’t changed, and therefore this pop will only be temporary at best. We will look to sell rallies on the first signs of weakness at this point. Buying isn’t considered at the moment as there is simply far too much headline risk. If we were to take a long position, it would only be for a short-term trade, maybe a scalp. The breaking of the 1.35 level would change that for us though as it would show that there was real strength.