After sharp rise in the pair EUR/USD last week the price is being corrected this week with minor surges up and down. On Wednesday the Euro declined against the USD due to pressure caused by weak economic data from Germany. In June, volume of industrial output in Germany fell more than expected. Reports demonstrated to investors that although leaders of Eurozone and ECB do all possible to support the Euro, economies of the leading countries of Eurozone and a whole Europe continue to decline.
The Euro had dipped slightly under pressure and then consolidated at the level of 1.2360. Some traders and investors have concerns about the European currency; therefore many of them sell the Euro and buy the currencies of the countries with higher interest rates and better growth outlooks. This fact added more pressure on the pair EUR/USD.
2. Important levels (Support and Resistance)
Situation in the pair EURUSD is ambiguous. On the one hand leaders of Eurozone and European Central Banks expend a lot of efforts to support the Euro. On the other hand, economies of the EU countries, even the largest of them, continue to deteriorate, troubled countries, such as Spain, Italy, Portugal are in suspense, situation in Greece is even more complex and ambiguous.
Due to these facts, the pair EUR/USD has calmed down in anticipation of further news and is moving in the channel of 1.2330 – 1.2400. If “bearish” sentiment dominates and the price breaks down the initial support level, the pair may fall to the next support level of 1.2255. If the price consolidates at this level and in case of no news from European trading floors, downward movement may continue up to the key support level of 1.2160.
The rise in the pair EURUSD will be also possible if the leaders of Eurozone and European Central Banks will gather strength and implement plans to support European currency.
3. Best entry/exit points
European currency remains under pressure and positive prospects are not expected. Most likely further decline in the pair EUR/USD will take place in advance of news from leaders of EU and ECB.
Today, it is advisable to set short positions with profit taking at the level of 1.2260 (70), around the key support level.
4. Supporting facts
MACD indicator is in the positive area below the signal line and is directed downward, which gives a clear signal for opening short positions.
In the near future recovery of the European economy is unlikely, as all indicators demonstrate that decline will continue.