Euro Pressured to the Downside Again

Christopher Lewis

By: Christopher Lewis

The EUR/USD pair has fallen in a particularly bearish session on Wednesday as the German government has failed to sell half of the expected bond sale for the day. The markets have been struggling to break below the 1.35 – 1.34 area as it showed itself to be significant support for this pair that seems to defy gravity.

The pair is seeing serious pressure in the US session as well, which is known for buying the Euro and selling the Dollar. The pattern of late has been to reverse the selling in Europe, especially in the afternoon once the European traders have gone home for the day. The stock market is almost completely correlated with this pair now, and as such this pair is almost religiously bought up by Americans. The pair is now entering a dangerous phase for those bulls though.

The breaking down to the high 1.33 handle has signaled that the pair may be ready to test the bottom of the support band all the way down to the 1.31 level. The breaking below of that level would be disastrous for the Euro, and would signal much, much lower rates. The pair has been a “sell the rallies” pair for a while now, and should continue to be. The market does tend to pop suddenly on Euro-positive headlines, but the rallies have all failed to produce anything of a lasting nature. Euro bulls have been burnt so many times by this, one has to wonder how much more they are willing to put up with. Simply put, the entire future of the Euro is being questioned at the moment, and this isn’t a good sign going forward. Even if the Euro is ultimately saved, how many other currencies are being questioned about their future at the moment? It really is starting to get that bad.

Selling rallies will continue to be the way forward for this pair in the foreseeable future.

EUR/USD 11/24/11

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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