EUR/USD – Limited upside potential
The EUR/USD posted remarkable gains on positive market sentiment on Tuesday clearing the 1.24 level to close at 1.2469. With markets around the globe heading for a bull run on escalating speculation that the political leaders could carve out a plan to tame off the crisis in the Euro region, it looks like the meeting between leaders in Europe are likely to set the tone for the price action this week. Europe, however, has taught us one lesson in the recent past. Every time sings of hope enter the marketplace, they always get squashed by someone and this could only be a matter of time. The pair is currently trading right under the resistance level at 1.25 and there is further strong resistance all the way up to 1.27. With the Federal Reserve releasing its minutes from the last meeting soon and with no signs of quantitative easing in the horizon, there is a good chance that the pair could sell off. The near term support level for the bears to watch sits at 1.2421. With the pair currently at the at the top of a rising wedge and the RSI approaching overbought levels on the daily chart, the technical set up suggests that the recent upward movement may be matured and further upsides could be limited. Breaking below the 1.2421 level could open the door for further movement all the way down to 1.2280.
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