Hello Traders,

The Euro has taken a beating today as more and more news hits the wires that several of the European Union member nations are having more severe fiscal issue. Before, it was just Greece in the news. Now, it’s Portugal, Spain, Ireland, Italy and some of the emerging member nations such as Latvia. With fiscal “cat out of the bag” (something we’ve been watching since late last year), the fall of the Euro against most of it’s major trading partners should accelerate.

We have a pending sell stop on the EURGBP @ .8712. The target for the pair, longer term is quite a few pips down @ .8500 first, then .8350 to follow. Again, that’s if the news of Europe’s financial maladies persist and the UK’s don’t get too horrible. Also, it appear that technically, the pair just simply needs to rebalance, at least near .8500. Time will tell. For such a large target, and since the pair pays nearly double each pip, take care to not overleverage. Once we get a daily close below .8700, it will help confirm a resumption south.

EURUSD: On the downside, the pair has struck a 4 hr trend wall with a bit of an overshoot, and is now consolidating. Unless the NFP report number is stellar tomorrow, we’re looking for an end of week consolidation to occur. If you’re a PA Chart subscriber,as we go into the Asian and London sessions later today,  look for a short term reversal @ the HSI R1, and a stronger potential reversal @ R2. If you must trade on Friday, careful of some big whipsaw if the NFP numbers and revisions are mixed. The pair broke its last Friday’s close and an effort by the Euro bulls to try to re-capture that level remains a possibility. As issued via SMS, a bottom is likely in for the NY session today. And is typical before the NFP, a tight consolidation generally ensues until the news comes out. We’ll short the pair if it retraces to that level before NFP at 1.3780-84. In our opinion, the USD has now established a longer term down trend. And, next week, we’ll look at resuming taking shorts until the market tells us otherwise.

Great trading to you.