Today EURUSD broke above its down trending highs that began in the middle of January. With the markets seemingly back on the risk trains, is this the beginning of a rally in the EUR? This could indeed be the beginning of a rally in both the EUR and equities, but it would be short lived.
The economic situation in Europe has not improved, in fact it has gotten worse, and we are still many months away before any central bank will begin to raise rates again. But for the short term EURUSD looks to be making a technical retrace fueled by record amounts of shorts in the EUR. This retrace could easily make its way to the 1.40 level in the EUR before coming back down to the 1.33 level.
Either of these moves can easily be played in the market. The upward move however, will faster and harder than the downward one which is usually smoother and longer lasting than a retrace.