The EUR/USD pair attempted to rally during the session on Tuesday as traders came back to their desks in full force, but as you can see the rally failed and the Euro lost ground yet again. When you look at this chart, you can see that the trend is most decidedly bearish, but I do suspect that the 1.27 level is going to be a difficult nut to crack as we try to break it down.
Interestingly enough, the US Dollar Index produced a hammer for the session on Tuesday as well, so this does suggest that we should see more Dollar bullishness. With the EUR/USD pair being 40% of that contract, it certainly has a lot of correlation with the Euro in general.
I think that rallies will continue to be selling opportunities going forward, and I also suspect that the 1.30 level will be very resistive now. What I find interesting about this chart is that we are approaching a trend line, which of course has been broken to the upside yet, and we did fall bit during the session as if in anticipation of hitting it. Because of this, I think that there are a lot of people and are looking to short the Euro in the short term, as well as perhaps for a cyclical play.
The currency they couldn't kill
One of the biggest problems for shorting the Euro is the fact that it seems like a matter what you do, no matter what happens, there's always a bounce in its somewhere. It is because of this that I am a bit hesitant to start selling at this point, but would rather wait for a little bit more bullishness to come into the market to fade.
Going forward, I do think that a move lower is likely to happen, but we need to see a sustained break below 1.27 before we start to really grind down. I feel much more comfortable selling the rallies as it gives me an opportunity to pick up momentum with the market as well, as opposed to trying to explore new areas. With that being said, I have zero interest in buying the Euro because of the numerous and almost untold amount of problems in that region.
