EUR/USD fell most of the session on Friday but managed a bit of a pop in the later hours as the Americans took control. This pattern has been repeated over and over – the Asians and Europeans sell the Euro, and the Americans are willing to buy it off of them.
The hammer that was formed in this market does look strong overall, and is hovering right below the 1.23 level. This area have been important a few times in the past, but the strength of the level seems to suggest that it is a minor area, not a major one.
The pair currently features a currency that is expected to see more easing in September in the case of the US dollar, and a complete mess on several levels in the form of the Euro. The debt issues in Europe are very far from being corrected, and until they are – the Euro will be susceptible to speculative attacks as confidence in the currency erodes.
Rising Wedge?
The other possibility that I see in this market is that we are trying to form a rising wedge, and as you can see on the chart – there is plenty of reason to this so. This is often a bearish signal, and as I think the Euro is doomed for some time now, a break below the uptrend line wouldn’t surprise me at all.
The market has had a couple of bearish flags lately suggest a move down to the 1.15 level, and I think that we are still heading there ultimately. The European Union is an absolute mess, and we are obviously seeing some structural issues in Europe as well.
The 1.25 level is the epicenter of the massive resistance above. The rest of the resistance goes all the way up to the 1.27 area, and as such I think there is simply far too much noise for this market to overcome at this point in time. The Euro does get the “hopium fueled” rally from time to time, but I think that any rally is to be sold as a general rule.
