Euro Slides Below 1.30

By: Christopher Lewis

The EUR/USD pair has been the focal point of most Forex traders over the last several months, and today we find it falling below the 1.30 mark for the first time in almost a year. The breakdown is being helped along as the EU continues to dawdle when it comes to finding a “fix” for the debt issues that several of the members of that union have. The continued lack of seriousness in the fixing of this issue should continue to plague any growth or strength in Europe.

The 1.30 level is a significant level of support, and the band of buyers is probably a bit thick. However, the 1.31 level was once very difficult as well, but has finally and decisively given way. The pair simply looks broken, and any bounce form this level will more than likely be the “dead cat bounce” variety as some participants in the market still cling to the “Dollar down, stocks up” mantra.

The recent action in the market suggests that only a fiscal union in Europe can be the accepted fix, and with the recent refusal of British Prime Minister David Cameron to sign, many thought the Pound would be hit hard. Truth is, the EUR/GBP pair is in a freefall. This further suggests weakness in the Euro, and as long as the US dollar remains a safe haven of sorts, the EUR/USD should continue its downward path.

Further weighing on the Euro is the fact that even with some kind of fiscal union that the market will want; it also has an economy that is almost certainly going into recession, and a central bank that should continue to ease as the conditions on the continent deteriorate.

The breaking below the 1.30 level won’t necessarily be “confirmed” until a 1.29 handle is printed, but the market looks set to fall. The next significant support in this pair is found down at the 1.25 level, and it is where I believe this pair is heading next – perhaps after some kind of slight bounce at best. Looking forward, the EUR/USD will be heading much, much lower over the next few months.