The Euro has fallen again during the trading session on Thursday, as the European Central Bank ponders whether or not to do anything.The market has been paying close attention to the Federal Reserve and the fact that the Fed is going to be tapering, while the ECB still has no idea what it is going to do. That should continue to drive the US dollar higher, as interest rates are starting to spike in multiple bond markets.
The 1.15 level of course is an area that would attract a certain amount of attention, so now that we are below that level it stands to reason that we have further to go. I currently believe that this market will find its way down to the 1.1250 level given enough time, but as you know, the Euro can take it is time finding its way. The overall attitude of the market has been relatively negative for a while, and now it seems as if the general public is starting to catch up to that thought process as well.
As far as buying is concerned, I have no interest in doing so until we clear the 1.16 level to the upside, which of course would take a Herculean effort. The market would more than likely continue to be strong after that, due to the fact that it would be such a major turnaround. With the US Dollar Index breaking above the 94.50 level, it does suggest that we have much further to go. The 1.16 level is also attracting the 50 day EMA, which of course is a technical indicator that a lot of people will pay attention to. Nonetheless, it is very difficult to imagine that we get there anytime soon, although we may get a little bit of short covering heading into the weekend.
If the market were to continue going lower from here, it more than likely be a result of US dollar strength across-the-board. This pair does tend to trade as a bit of a proxy for the US Dollar, as the Euro makes up roughly half of what that calculation entails. Ultimately, the nasty candlestick that we formed on Wednesday is one that typically gets a bit of follow-through, as we close at the bottom of the very long range.
