The EUR/USD pair bounced back and forth during the session on Friday, showing that there was real indecision in the marketplace. However, I recognize that the 1.11 level continues offer support, and there was of course a supportive uptrend line that I have drawn on this chart and has held true so far. Below there, I believe that the 1.10 level offers support as well, so quite frankly it’s difficult to imagine a scenario in which I sell the European currency at the moment.
Also, you have to keep in mind that the Euro is massively oversold. If you look at the longer-term chart, the fall was rather precipitous and you have to wonder if there’s anybody left at this point that would sell this currency pair, as it has been pushed so low. After all, we are trying to price in Armageddon in the European Union, and it’s becoming increasingly obvious that we are not going to get it. With that, I feel that a lot of the “smart money” is buying euros at the moment as it should longer-term prevail over the US dollar which of course has its own issues longer term.
Greece is only a distraction
I believe that Greece is basically a distraction at this point, mainly because the Europeans have to get things fixed. It easy to fix things when you have no choice, although they are certainly trying to make it as difficult as possible. Ultimately, I believe that we break above the 1.15 level, and then starts a longer-term “buy-and-hold” type of scenario. At that point in time I would be buying dips as they occurred, recognizing that we should probably go on a multi-year rally to the upside as we tend to do in the Forex market anyway. Regardless, this pair is oversold and it’s really difficult to imagine anybody else thinking any differently when they look at the longer-term charts, as it has been so ugly.
