EUR/USD has been declining to multi-year lows heading to key support level of 1.188. Greek stock market in the meantime has retraced a little since it hit a 10-year low and following yesterday’s 7% dip it looks like there is going to retest the support line to say the least. I had talked about the long term decline of EUR/USD 3 months ago and EU summit deal now seems more than a trap for investors instead of a promising rally than never happened. It will be interesting to find out in the next weeks, if forex and stock trading are going to align regarding the simultaneous confirmation of multi-year lows shown in the specific graphs.
There’s no point discussing about technical analysis on the currency trading graph, given the well-defined downtrend of EUR-USD. The chart is useful though for pointing out the resistance that the downtrend is expected to meet when approaching 1.19. We can’t be sure at this moment whether the level will hold the forex pair price from falling further below, but we do know that the decline will at least slow down at that price due to the importance of the level.
The same analysis applies to the Greek stock market graph. Greek stocks have been suffering huge losses since the economic crisis hit the country in 2009 and the level at 500 points is their only hope, despite the 10% up day a couple of weeks ago. In case Greek General Index drops below that level continuing its decline, the stock market will head to 1990’s prices. For some traders those cheap prices could be an excellent excuse to enter the market, but for trapped investors who have been losing money for months now, that scenario isn’t exactly what they were wishing for.
Since Greek economy seems to affect the EUR/USD currency pair along with Spanish and Italian economic news, I assume that we are going to see either a confirmation or a breakout at the same time for both the Greek stock market and Euro. Until then I’m holding on my US dollars and avoid investing in Greek stocks.