EUR/USD tested the 1.3600 support on Monday, there were no major swings either side. ("This morning after below consensus CPI data from Saxony in Germany we see lower levels again in EUR/USD. A look at the 2 hour chart shows a re-test of the strong support level in the 1.3600:10 area. If this level holds on an hourly closing basis we could see a recovery again from near current levels back up towards 1.3630:40, potentially even higher. While we do not expect any stronger rally ahead of the ECB meeting on Thursday we are short term bullish against support at 1.3600 and 1.3588. Intraday traders should prefer the long side of the market as we anticipate a re-test of last week’s high.")
Monday`s price action shows that the EUR bears are still in control. Every small bounce was sold immediately. This will probably not change until we know the outcome of Thursday's ECB meeting. We expect new lows below the last week's low of 1.3588 – anything else would be a surprise. Traders should stay away from long positions for the moment. Only a move back above 1.3650 and 1.3730 can negate the bearish scenario with new lows ahead of the ECB. Watch CPI flash estimate data for the euro zone at 11 am CET – this could be the catalyst for another leg lower.
Trade Recommendation:
Entry @ 1.3609
Stop @ 1.3652
Target @ 1.3547
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