ForexLive's  Instablog

The EUR/USD (FXE) starts the NY session within the trading range from Friday. The gap from Friday to Monday was filled. The price high came in at 1.27487 - short of the first key target at 1.2778-84. Similar to last weekend when the Spanish bank bailout was announced, the high came in the 2nd hour of trading today, followed by a steady sell off.

From a technical perspective, the price is opening NY below/around the 38.2% of the move up from the June 12th low at 1.26294. The underside of the trend line from the low comes in at the 1.2635. The pair has lows for the day at the 1.26176, 1.26136 and is just making new lows. Off the 1st low reached in London at 1.26176, the correction held the 38.2% at the 1.26581. This increases the negative bias for the pair in the early hours of NY. The reality of Greece - despite the leadership - continues to be a problem.

There will be continued headlines coming out of Greece with governments officially forming. If there is a rally off a headline I would expect sellers against the 1.2667 level. This is the 38.2% of the move down from the June 1 high and proved to be a resistance level for this month (prior to the gap higher over the weekend).

The next key downside target comes in at the 50% at the 1.25934. The low from Friday at the 1.2591 and 100 hour MA (blue line in the chart above), makes the level a key support level for the pair (with a stop below the 100 hour MA at the 1.25814 (and rising). I would expect the decline to stall around this level (for the day that is), as the market prepares for the next key event, the FOMC interest rate decision on Wednesday. Overall, however, with the election over and a Greek default for the time being at least avoided, the good news is over. So I would expect the sellers to be more comfortable selling on rallies against key levels.