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This is a market that continues to see plenty of sellers.
The euro fell on Wednesday as we continue to see US dollar strength increase. We have been in a downtrend for quite some time, so it does make sense that we would see the euro fall because of it. That being said, the market is likely to continue to be one that looks at these rallies as selling opportunities. The overall attitude of the market will continue to see quite a bit of noisy behavior, as there are quite a few different things going on at the same time that greatly influence what happens with the US dollar.
It’s interesting that the Austrian central bank chief had suggested 50 basis points of rate hikes would be necessary, and the euro promptly fell. This shows just how weak the currency is, and how the recent rally was absolute nonsense. Given enough time, it’s likely that we would see the euro sell off every time there seems to be a rally, and it’s likely at this point we will go looking to reach the 1.04 level over the longer term. The euro continues to suffer at the hands of every weak economy and the fact that growth is more likely than not going to be a major issue.
Even though the ECB may start to raise interest rates, they are far behind the United States and that will continue to be a major factor in where this pair goes. It is obvious that the 1.08 level has offered significant resistance now, and it has become apparent that the previous support has now been a significant area of selling. Looking at the chart, I believe that the 1.05 level could be a bit of a target over the next several days, and if we can break down below that level, then we will go looking to break through the recent lows. Given enough time, we could even see parity, but that’s something that comes down the road. Obviously, the trend remains very negative, and you cannot fight it. In fact, it’s not until we break above the 1.09 level that we would have to think about buying, and then we also have to deal with the 200-day EMA as well. This is a market that continues to see plenty of sellers.
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