The EUR USD posted a closing price reversal bottom after positive comments from Greek officials encouraged weak shorts to lighten up their positions. After touching a new low for the year overnight, the EUR USD turned around as the lack of fresh selling pressure scared some of the weaker shorts out of the market. Near the midsession, the Euro moved higher as the market responded to new budget cut proposals by Greece. This triggered the short-covering rally which produced the closing price reversal bottom.
Technically, the closing price reversal bottom is a good sign that selling pressure is drying up. Watch for a follow-through to the upside to confirm the bottom. This move should lead to a test of the recent swing top at 1.3692. A break through this price will turn the main trend to up and should trigger an acceleration to the upside as many shorts will be forced to cover. The charts indicate plenty of room to the upside with 1.4009 a possible short-term target.
On Tuesday, the U.S. Dollar finished mixed against most majors as traders tried to decide whether it had reached the end of the rally, This morning’s surge to the upside in the March Dollar Index fell short of the recent main top at 81.43 before turning lower. This is an indication that the selling may be greater than the buying at current levels. The formation of a secondary lower top will also be a strong sign that this market is getting ready to rollover to the downside.