The EUR/USD pair initially tried to rally during the course of the day on Thursday, but as you can see struggled and turned back around to form a little bit of a shooting star. Ultimately though, this pair does look like its very bearish and I believe that the sellers will continue to step in and sell this pair going forward. With that being the case, I have no interest in buying this pair and a look to sell every time we rally on the short-term chart.
I am especially interested in shorting this market near the 1.15 level which I believe will be a bit of a ceiling at this point in time. The 1.14 level of course has acted as resistance as well, and quite frankly I just don’t see an argument for buying the Euro right now. Sure, it’s oversold but at this point in time we have only begun to see the imbalance of economic activity between the European Union and the United States.
Interest rates keep calling for a higher dollar
If you follow the bond markets, interest rates are falling in the US treasuries, which means people are still buying them. In other words, they believe in the US dollar more than the Euro because they have to purchase US dollars in order to buy that safety asset. With that being the case, I do not see a situation where the Euro rises for any significant amount of time and I believe that we are going much lower.
I have previously suggested that the 1.10 level was going to be a massive support level. I still think that’s the case, but I now believe that we are going to break down below there and perhaps even as low as parity given enough time. It’s going to take a long time to get there obviously, and it may not even be this year. But nonetheless I still remain very bearish and will not be convinced of euro strength until we break above the 1.20 level, which is something that seems almost impossible at this point in time.
