The EUR/USD pair had a significant selloff during the session on Tuesday, as Cyprus voted against the potential "tax" that the troika suggested in order to get a bailout of that country’s banks. Because of this, earlier in the session we started the see the Euro selloff in general, as word got out that it was very unlikely to pass the Cypriot Parliament.
Within this chart, you can see that the gap that formed on Monday morning was essentially filled, as the market struggled of the 1.3 level on Monday. The action since then has been negative, as we have driven down towards the 1.2850 level. However, I think it is in this general vicinity that we will start to see a significant attempt at support.
Looking at the longer-term charts, the 1.2850 level does carry some weight overall, and as a result I think it makes sense that this market will struggle to break down much farther. However, there are certainly enough headwinds out there to push the value the Euro down. After all, it seems like 100 years ago that we were talking about the Italian parliamentary elections and a lack of a government coalition. By the way, that hasn't changed.
Structurally flawed
By now, I am shorting here more and more be will talk about how the Euro is a structurally flawed currency. Certainly, there have been plenty of examples of why the Euro probably isn't a great idea. After all, it would be much like the Americas trying to form one currency. It just doesn't make sense, and there are so many different economies in the mix, and at different levels of production, that it is an impossibility makes it work out. For the life of me, I cannot imagine a currency that covers both Panama and the United States, while at the same time trying to work in Nicaragua and Canada. It just makes no sense, and is completely impractical. I believe this is what we are seeing in the Euro at the moment.
However, we know the bureaucrats in Europe will not relent, and admit their failure. Because of this, I believe that the Euro will be a very volatile currency for the foreseeable future, with a downward slant. We may be due for a rally at this point, but I believe that it will be very difficult for the buyers to move this currency above the 1.3150 area. With that in mind, I will be selling rallies.
