Chance To Short The EURUSD?
The US dollar has strengthened against the euro during the last few days. Two major events actually contributed to the recent EURUSD slide. First was the ‘dovish’ statement of the European Central (ECB) Chairman Mario Draghi in which he mentioned that the low interest rates in the eurozone will stay for an extended period of time. The second was the better-than-expected non-farm payrolls (NFP) report in the US. Private companies added 195,000 jobs in June versus an estimate of only 163,000. This actually signaled the market that the US Fed may start tapering its bond purchases this October.
As you can see from the 1-hour chart of the EUR/USD pair above, the pair has fallen to a low of around 1.2810 from 1.3000. A rally, however, has occurred today and the pair is back at 1.2860. Note that the 1.2860 level falls right at the downward sloping resistance line where some selling could be met. Moreover, a presence of a hidden bullish divergence or a negative reversal plus an overbought condition as seen in its stochastics suggest that the pair may slide once again.
