The currency of the European Monetary Union has continued to demonstrated its weakness, especially after the bail-out approval that Greece is waiting for. This final decision would be key to prevent the Hellenic country from having to declare a default. However, despite the strong support that the other members of the European Union has revealed and the remarks of the President of the European Central Bank, Jean Claude Trichet, at the moment there is not guarantee that other Mediterranean economies could avoid a financial contagion.
This chart, which shows the evolution of the euro against the American dollar expresses in some way the overall situation we have just described. As we analyzed in our last report, http://timelymarkets.blogspot.com/2010/03/euro-against-dollar-european-currencys.html , there was a serious likelihood that the european currency could reach the level of 1.30. The next sessions involved a brief recovery, after a rebound to the resistance of 1.37. But, the aforementioned events brought about a sharp collapse. Even the strong support of the 1.30 has been unable to offset such a intense bearish movement.
The scenario for the euro remain downwards. The next support, placed in 1.25, should concentrate new bullish interest. Because of that, this area could be a strategic level to open long positions for those investors who are less risk averse.
The recommendation is to buy euros at the zone of 1.25. We´d close this position as long as it hits again the level of 1.30 -1.31. Stop loss in 1.23.
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