EUR/USD rose straight up for the Wednesday session as traders celebrated more rumors of free money for the Greeks in the form of some kind of bailout being put together by the IMF. The bond auctions are a mixed bag, and the German Bunds continue to attract a lot of money. Because of this, we have to question the underlying strength of this move.
The pair is most decidedly in a down trend, and the pop could very well be the start of a nice correction that will allow us to sell at higher prices. Certainly anyone who is buying Euros at this point is running on more “hopium” as we saw last year, and to think the trend is about to change is being a bit premature.
Because of this, we are very interested in seeing what happens if we reach the 1.20 area. This area should be very resistive, and we would sell any signs of weakness in a heartbeat. We will not buy at this point – there are far too many reasons not to.