By: Christopher Lewis
The EUR/USD fell again on Friday as the Non-Farm Payroll report came out better than expected. This showed a nice contrast to the situation in Europe as the situation over there continues to get worse. The American economy continues to look like it is expanding, albeit slower than it used to. The fact is that growth could be a rarity in the year coming, and money of course will flow to where you can find it.
The European Union continues to find itself with a lot of problems currently, and the French bond market is currently selling off, causing higher rates for Europe’s second largest economy. The fact that the bond traders are starting to ask questions of Franc shows that the core is still being attacked. The bond markets in France are a key market for the EU, and this could signal uglier things to come.
Adding to this problem is the situation in Hungary, which has a ton of debt to the EU countries. The Hungarian central bank has recently been stripped of its independence, and the fact that they are having issues selling their debt could turn around and blow up in the face of such countries as Austria and Germany. If Hungary has to default, this will certainly hamper the EU going forward.
The Euro Should Continue to Fall
The pair has broken below the 1.28 level, and this shows just how weak the EUR/USD currently is. The Euro in general is getting dumped, and the world should continue to run towards the Dollar. The candle for Friday closed towards the bottom of the range, and the fact that the Non-Farm Payroll release couldn’t give this pair a boost shows that the Euro is to be sold at all costs.
.jpg "EUR/USD Daily 1/9/12")
The 1.3050 area should continue to be the resistance that keeps a lid on this market. The 1.26 level below look supportive on the longer term charts, and if we can get below that – 1.19 is calling. I am personally selling this pair on all rallies and a daily close below the 1.26 level. The pair can be choppy, and will continue to be, but the bias is certainly to the downside at this point.