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Euro's Pain Continues

The bad news coming out of Europe is keeping euro from recovering part of its sustained decline against the greenback. The pair has been in oversold territory for quite some time. The 9-day RSI is still showing divergence but the pair is reacting more to Spain worries than to any chart pattern.

This week, EUR/USD bounced up little bit - reaching 1.2624 - in the low-volume trading on Memorial Day, when the banks in USA, Germany, France and Switzerland were closed. However, the bounce hit the support-turned-resistance level of the January lows of 1.2624. Since then it has breached the 1.2400 level.

EUR/USD has been declining for so long that there may still be a dead cat bounce but if it happens then it will be a short lived one as the medium term (months) trend is down - the longer term (years) trend is range bound.

Note: EUR/USD can be traded through ETFs like FXE.