The EUR/USD (Euro Dollar) bottomed on January 13, 2012 at 1.262 from a severely oversold technical condition. Since that time, the EUR/USD has surged sharply higher and is now trading into the 1.329 level. This type of robust rebound is very common after such a steep downdraft. In fact, the EUR/USD still could have some more upside left in the tank before another major pullback takes place.
Currency traders must watch for near term daily chart resistance around the 1.339 area. This is a likely area that traders can sell short the EUR/USD, this resistance level is very strong. The fifty percent retrace level from the October 27, 2011 top to the January 2012 low will be at 1.344, this is definitely another important resistance point should the EUR/USD trade up to that level. Personally I do not expect this level to get tagged; however, you just never know for sure what the central banks will do. This morning, the EUR/USD will have intra-day support around the 1.327, 1.325, and 1.322 levels.
Some other vehicles for traders to play the EuroDollar will be to use the CurrencyShares Euro Trust (NYSEARCA:FXE), and the ProShares Ultra Short Euro ETF (NYSEARCA:EUO).