The EUR/USD pair fell during the bulk of the session on Monday, testing the 1.05 handle. This is an area that has been supportive in the past, so therefore it does not surprise me at all that we bounced. That bounce of course forming a hammer is a very bullish sign but I have no interest in buying this pair. I recognize that the Euro is a massive ball of trouble waiting to happen, and as a result I have no interest in being long of this pair. On top of that, the US dollar of course has strengthened exponentially for some time, so as a result I have no interest in shorting the Dollar.
Ultimately though, one thing that I cannot help but notice is that the US Dollar Index formed a shooting star at the 100 level. That’s a large, round, psychologically significant number, so it doesn’t surprise me at all that the sellers stepped back in. However, I think this is a temporary setback for the greenback, so really at this point in time I believe that the longer-term trend should still stay in effect.
European Central Bank
Remember, the European Central Bank continues to liquefy the markets and therefore I believe that the Euro will continue to lose value over the longer term. I don’t really have any interest in buying the Euro, simply because I think that we have longer-term issues at work here. Yes, the Euro has lost quite a bit of value over the last several months, and no, I don’t believe that we are going to meltdown again. However, I recognize that the downtrend should continue and I think it’s only a matter of time before this pair goes down to the parity level.
I look at rallies at this point in time as selling opportunities, and with that I am going to step back and watch this market bounce a bit. I will sell resistive candles above, and not hesitate. I would also sell a break down below the 1.05 level, as I think that opens the market down to the parity level as well. I have no interest in buying.
