The EUR/USD pair initially tried to rally during the session on Friday, but then turned back around to form a slightly negative candle. The area just above looks to be very resistive, as we have seen selling several days in a row. With that being the case, the market looks as if it’s ready to continue to go lower. With that being the case, I feel that we will continue the trend to the downside as the 1.15 level above is basically a ceiling at this point in time. I don’t see the market going above there, but more importantly I see massive resistance near the 1.18 level, leading all the way up to the 1.20 handle.
I believe the 1.10 level is the next target, and that we will not only test that area for support, but we will go even lower than that given enough time. With the bond yields in the United States dropping even further, it shows that there is going to be demand for the relative safety of the US dollar. Because of this, I believe that every time we rally we will have a selling opportunity in this marketplace, although it will probably be more or less a short-term in nature as a lot of volatility should enter the marketplace at these already the very shallow lows.
Continued downtrend
I believe that this downtrend simply continues, as the reasons for selling the Euro continue to expand. Ultimately, this is a marketplace that has had a struggle every time that we rally, and that’s because it seems as if every time we think that all of the bad news out of Europe has come out, something else comes along. With that being the case, the market seems as if the sellers will continue to have the upper hand, and therefore anytime that we rally I will be looking at that as an opportunity to pick up the us dollar on “value.” Ultimately, this pair could go as low as parity.
