EUR/USD Weekly Close: 1.2660
Daily High/Lows: Fri Jun 29 1.2693/1.2433 Thu Jun 28 1.2524/1.2407 Wed Jun 27 1.2508/1.2446 Tue Jun 26 1.2530/1.2442
Pivots: S3: 1.2237; S2: 1.2335; S1: 1.2497; P: 1.2595; R1: 1.2757; R2: 1.2855; R3: 1.3017
EUR/USD: The market reversed its risk aversion stance from the prior week with a vengeance early Friday European time. This was a result of the overwhelmingly positive response to the EU Summit measures agreed on by the 17-nation leaders. Risk appetite across the asset classes marched strong. US and European equities climbed, commodity markets including gold and oil traded bullish, and the dollar and yen pairs weakened, all signs of increasing risk appetite. The week is starting on this strong note, as the markets digest the plan and look ahead to the coming week’s event risks including Thursday’s Bank of England and European Central Bank Rate Decisions and Friday’s US Employment statistics. On the technical front, the focus of the Weekly Forex Play is the EUR/USD. What happens the coming week depends upon the ability of the EUR/USD to hold below 1.2748. This key level kicked off the 5-wave impulsive move down that ended the week at a low of 1.2407 before this massive retracement took place without pause. Friday’s correction extended past the 78.6% retracement of the last swing move from 1.2748 on June 17th to the low of 1.2407 on June 28th. This orange (2) is complete at 1.2693 unless price takes out the invalidation point of Point 0 at 1.2748. The two scenarios are as follows: 1) EUR/USD bounces around below 1.2748 before the orange (3) resumes its downward trend. 2) EUR/USD trades through 1.2748 and the Weekly Picture kicks in (see Weekly insert). Then we are looking at a deeper retracement of the last Weekly swing move from a high of 1.3486 the week of Feb. 19th to the low of 1.2288 printing the week of May 27th. The Weekly retracements could take us to the 50% level at 1.2887 followed by the 61.8% at 1.3029 before the downtrend resumes. Both counts are valid although the first count is favored. 1.2748 holds the keys to the kingdom Have a great trading week!