EUR/USD Opens up 1.2870 as Spanish Yields Surge

Daily Forex Technicals | Written by FXTimes | May 09 12 13:37 GMT

The EUR/USD chart in the 1H time-frame shows a market with persistent bearish momentum. The RSI reading has held below 60 and has been able to tag 30. Price action continues to make lower highs and lows. The 5/9 European session saw equities fall, and Spanish yields surged, with 10-year notes pushing above 6.00% see in the daily time-frame below. This represents risk aversion and reflects the markets weighing on the euro.

Combined with the uncertainty of the Greek election and the relationship of the newly elected French president Hollande with German chancellor Merkel, these factors provided for the EUR/USD to hold below 1.30, and to break below 1.2950 heading into the 5/9 US session. The RSI reading in the 1H chart continues to reflect persistent bearish momentum.

The daily chart shows the next pivot being around 1.2870. This area was support on 12/29, then resistance 1/13, and support again 1/20 and 1/23. With consideration of a bearish market development, any bullish outlook from this pivot should be limited to 1.30. If the market indeed holds below 1.30, our bearish outlook might not be over. The 1.2625-1.2670 2012 lows could be in sight.

There will be a meeting between Hollande and Merkel tomorrow. Hollande is a leftist and expected to fight the German-lead austerity measures, where Sarkozy (ex-French president) was more agreeable with Merkel. If the market sees their differences being another barrier to solving the Eurozone debt crisis, the EUR/USD can open up 1.2625-1.2670 without significant correction from the 1.2870 pivot.

 

FXTimes

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