EURUSD rallied from  NY Close 1.3495 up to 1.3678 early in Asia this morning after European governments offered Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates to try and end its fiscal crisis and restore confidence in the currency.

The topside of the daily bearish trend channel was at 1.3483 and apparently the level is broken with RSI confirming the break of bearish momentum as well.

I think there will be good supply around 1.3695-1.3730 area queuing up to provide liquidity so going short above 1.3650 sounds reasonable at the moment to catch a retrace lower.

Sell EURUSD at 1.3650 and 1.3695 with a tight SL at 1.3730, targeting 1.3575 and 1.3485 accordingly.

U.S. stocks rose to the highest level in a week after European leaders pledged to aid Greece while European leaders also ordered Greece to get the bloc’s highest budget deficit under control and promised “determined” action to staunch the worst crisis in the euro currency’s 11-year history.
Euro had a low print of 1.3595 overnight after 1.3802 in Asia and trading at 1.3692 at the moment .
Aussie broke 0.8785 and 0.8865 resistance accordingly after a much better than expected Employment data yesterday. After a 0.8906 high early in London session retraced down to 0.8835 ( a possible fear of double topping around 0.8906/16 area) but managed to climb higher and bids in cue between 0.8892-0.8903 level at the moment .
S&P closed the day above 1075 resistance and with Stocks leading the way on risk appetitte while Oil heading north may bring a bumpy session to Friday with a more risk on theme.

(Bloomberg) — Greek Finance Minister George Papaconstantinou said he can’t call for outside aid as his government struggles to cut the European Union’s largest budget deficit.

“The worst possible signal which we could send out is one calling for outside help,” he said in an interview with Bloomberg Television in Athens yesterday. “We will tackle the deficit,” he said, adding that tax revenues in January exceeded forecasts “by some percentage points.”

I think above explains the situation of Greek problems& solutions right away.  Chicken, Egg or Egg, Chicken ?

The Dow closed below 10,000 for the first time since November yesterday as the market players were keen to sell bank shares due to heightened concerns about the EU’s sovereign debt troubles  while  world’s largest bond fund, PIMCO, said as much at a press conference yesterday, commenting on its reallocation of risk from Europe into Brazilian bonds and the CNY currency, while also expressing confidence in the US economy.

There is also some talk of how short the market is  in EURUSD  (FT gives the numbers on a old fashion headline style.) and why it should drop to 1.3500  at least to test the big option barrier down there.

Data from the Chicago Mercantile Exchange show net short positions against the single currency rising from 39,500 contracts to 43,700 contracts, equivalent to $7.6bn

First of all, this data doesn’t include the post NFP allocations. Worse than expected NFP led a shift in US Treasury yield curve such as US2Y moving from 0.87s to 0.75s  and  moving back to 0.779 at the moment. The risk aversion on the back of global growth prospects led XXX-JPY, USD-EM and equity markets suffering accordingly but I think market is getting over committed in short EURUSD  positions and idea of having EURUSD as a wash currency during this kind of wash-outs is a bit dangerous when DXY topping around and USDJPY moving in accordance to correlation with US2Y yields.

I believe the  risk in EURUSD is topside with the overall positioning in an oversold zone with strong momentum and w that may bring  an interesting topside squeeze if market fails to break downside support round 1.3575-85 area on a daily close.

So go long EURUSD at 1.3650-60 to buy more at 1.3595-05 area with a tight  SL at 1.3570 and target 1.3940 with a trailing stop at 1.3715 if 1.3845 trades.