It is finally time for EUR/USD to make a decision as it nears the apex point in a near-term symmetrical triangle (higher lows and lower highs will force a decision soon). If EUR/USD can confirm a breakout above 1.26244 (part 1 after Euro summit), I think it could rally to the overall downtrend line from August 2011 (1.29s it looks like, but it hits 1.28 towards the end of July). However, the overall trend for EUR/USD is still down. But if it can break through that downtrend line from 2011 and 1.30 ceiling resistance level, I think that would catalyze a strong move to the upside. It would break the descending channel. I'll do a new post on this when (or if) EUR/USD tests those levels in the future. The currency pair is currently reacting to the euro zone sovereign debt and banking crisis, Greece potentially leaving the euro zone, Spanish bank risk, Germany's involvement with the bailouts (watch German bunds), the *European Central Bank, the Federal Reserve, U.S. fiscal cliff risk, U.S recession risk, and a possible hard landing in China. *According to Bloomberg, economists expect the ECB to cut its benchmark rate by 25 basis points to 0.75% on Thursday.
"Economists expect the ECB to lower its benchmark interest rate by at least 25 basis points to a record low of 0.75 percent, according to the median of 57 estimates in a Bloomberg survey, as a worsening economic outlook dampens price pressures."
The ECB Should Cut Rates, Then Go Further (July 3/Bloomberg)
Euro Rallies After EU Leaders Loosen Bailout Policy at Euro Summit (June 29/DV)
Soros: This Euro Summit Will Decide if the Euro Breaks Down (Bloomberg Video) (June 28/DV)
Roubini Compares Eurozone Crisis to 1931, Warns of Depressions (BloombergVideo) (June 28/DV)