The EUR/USD pair fell during the session on Friday again, plunging below the 1.32 handle. As you can see on the chart, I have a red trend line drawn that: signs with significant pressure to the downside on the weekly chart. However, you can see that the market could not breakout to the upside, and it also is worth mentioning that we managed to break below the lows of the hammer that formed on Thursday. Because of this, I truly believe that weakness will continue in this market.
The European Central Bank has a bit of a problem on its hand, as the European economy is simply too weak to suggest that the Euro is going to enjoy some type of massive interest rate differential, as the ECB simply cannot do anything to tighten monetary supply at the moment. In fact, it seems highly likely that the ECB will do things to loosen monetary policy, while the Federal Reserve has just suggested a few sessions ago that perhaps they are at the end of the easing cycle.
Pay attention to the central banks.
When dealing with this pair, it's almost impossible not to pay attention to the words of central bankers. Simply put, although there are some technical bits and pieces here and there that you can follow, this is been an emotionally driven pair, just like most of the other Forex pairs out there. This was a bit different though, simply because it is a vote "up or down" when it comes to the United States and Europe. Weird we believe that interest rates are going higher? Well, it's obvious that it's in the United States. Is because of this that I believe of the longer-term this pair is going to weaken.
I would be remiss though if I didn't admit the fact that it seems that the Euro has at least nine lives, if not 99. Because of this, we can always have a reason to buy the Euro going forward, but right now I think that rallies will be selling opportunities in this pair.
