XEU Euro Daily Chart

We watched the descending triangle pattern unfold over the last three months. The vertical side is from 130 to 135, five points, so the downside projection once the base line at 130 failed is, 130-5 = 125. That target was achieved and then price gapped even lower. On Friday, 6/1/12, when the U.S. Jobs Report laid an egg, the equities markets tanked, and the euro typically moves in concert with equities but instead a key outside reversal day occurs.  Note the white candle that printed a lower low than Thursday's candle, and then turned around intraday and printed a higher high than Thursday. This is a bullish indication and yesterday the euro did follow thru to the upside filling the gap from three days earlier.

The indicators are favorable to seeing a temporary base form for the euro and for some further sideways to sideways up action ahead. The euro moves opposite to the dollar. An up euro should correspond to the broad indexes moving higher and visa versa. To no surprise, the pink bear flag is the opposite image shown on the dollar chart with the bull flag.  The euro bear flag would be agreeable to seeing some additional euro weakness in the very short term. The move lower in the euro, and the move higher in the dollar, both appear to be near their limits. One more burst for the dollar higher, and euro lower, would provide a nice set-up for a reversal. The other outcome is simply that the dollar heads lower and euro higher from here to provide a temporary equity rally. This information is for educational and entertainment purposes only. Do not invest based on anyting you read or view here. Consult your financial advisor before making any investment decision.