Euro heads south

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Regular readers will know that we have been bearish on the EURUSD pair since just after the start of 2013. A critical point, from the technical perspective, was reached recently when it failed to hold support at 1.30. This is a psychological level that just happened to coincide with the 200 day Simple Moving Average (SMA), which it and other pairs often respect.

There is no doubt the crisis in Cyprus is having an effect. Small as that economy is, it has the potential to spread contagion around the Euro zone. It has also reminded market participants that the ECB / EU / IMF Troika, while it will hopefully be effective in the long run, in the short term sometimes gives an impression of inefficiency that reaches almost to the point of bungling incompetence.

And Greece, Spain, Portugal and Italy have not gone away.

The next meaningful support for this pair is at the 1.27 level of mid November 2012.