EUR/USD came under further pressure overnight, as weak eurozone data and a general feeling the EU Summit was a dud kept the pair from finding any real buyers.
As detailed yesterday, we felt being short could potentially the best policy, with those wanting to sell rallies perhaps doing so at 1.26, which given the session high was 1.2620 worked out quite well.
Given the recent break of previously mentioned key levels, we still fell the pair should target 1.2150 over the short to medium term. While EUR/USD seems to be working well, for those looking at alternatives to express euro bearishness, perhaps look at selling EUR/CAD (currently 1.2861 at the time of writing), which failed to find any sustained buying above the 38.2% retracement of the February to May sell-off, and today closed below yesterday’s close.
We feel the price action is quite telling, and therefore could test support at 1.2784-77 (last week’s low and the January 2011 extreme), before ultimately making a potential move to 1.2455 (just above the June 2010 low). We feel traders could be placing stops just above the May 23 failure high at 1.2969.