EUR/USD had a wild back and forth day on Monday as traders continue to weigh everything European. The end of the US session received an announcement that the Europeans are in the middle of formulating a large-scale funding structure to recapitalize the EU’s banks. This lead to a rebound in the currency pair, and it even formed a hammer for the day at the 1.35 level. This shows that the level is going to be tough support, and a bounce is more likely than not at this point. However, until we get more clarity out of the EU, this pair will remain pressured to the downside, effectively slowing any potential gains. We would buy on a break of the highs from Monday, but would be quick to move protective stops up in the case of bad news. A breaking of the lows form Monday is a massively bearish sign.
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