EUR/USD Choppy Going into EU Summit (UUP)

June 26, 2012 3:06 PM EDT
Price action in the EUR/USD has been growing increasingly choppy heading into the EU summit later this week. The summit is being viewed by some as Europe's last chance to form a comprehensive solution to the financial crisis, but many investors are growing increasingly pessimistic and the odds for a meaningful resolution appear slim. Billionaire investor George Soros said early this week that the EU summit could be a fiasco, and reports out today support this view. The latest headlines have Germany's Angela Merkel making statements that make prospects for so called euro-bonds unlikely.

EUR/USD climbed off May lows in first few weeks in June, tapping highs near 1.2743 on June 19th in what traders say was a short squeeze. But since then the Euro has come back under pressure, sliding to 1.2500. Traders say consolidation in the currency pair might be coming to an end, and unless an upside catalyst in the form of euro-bonds or another solution is announced, the trend lower could resume immediately following the summit.

Traders have been using ETFs PowerShares DB US Dollar Index Bullish (NYSE: UUP) and CurrencyShares Euro Trust (FXE) to position.

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