By TraderVox.com
Tradervox (Dublin) – The Euro is experiencing a huge sell off in opening trades of the week. The EUR/USD pair is on a strong bearish rally with new bearish positions building up. The trend is hugely in favor of the bears and this is adding up the bearish volatility numbers in the EUR/USD trade. The currency pair has been able to break the strong psychological support at the 1.29 level to fall further. This has added fuel to the market sentiment of shorting EUR/USD sending the pair to near 1.283 levels.
On the one hour chart the pair is trading well below the 20 day and 10 day moving average with a huge bearish divergence indicating a stronger bearish run is waiting. The RSI is well past the oversold levels, but this has not deterred the EUR/USD bears which continue to surge supported by the bearish momentum and the strong downwards price action.
On the fundamental side things are not so rosy in the Euro zone. The weekend saw the Greek president call all parties to form the coalition government. The pro austerity parties failed to meet substantial numbers after a number of small parties under the banner of the anti bail out Syriza party declined to join the collation government. If the parties fail to reach an agreement another election could be seen soon, which has a high probability of bringing the Syriza party to power. This has raised an uncertainty cloud over Greece, raising fears that the country may soon run out of funds and may eventually end up bankrupt. Financial markets have already began to price in a possibility of a Greek exit sending the European stocks plunging and sparking a move away from Euro denominated assets to safe haven dollar, US treasuries and German Bunds. This has led to a sharp rise in the bond yields of Spain and Italy.
In other events the euro zone industrial production contracted by 0.3 % while markets expected a revival in the production capacity by 0.4%. This was a further blow to the weak EUR/USD. Now the Euro zone seems to be stuck in spiral of deep recession, unending debt and fears of possible exit by member countries.
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