The EUR/USD pair tried to break higher during the course of the day on Monday, but as you can see struggled to clear the top of a hammer. With that being the case, I feel that this market has shown just how much trouble it is in. I believe that the Euro will continue to be one of the softest currencies out there, and the fact that we couldn’t even break the top of the hammer tells me just how much selling pressure there must be in this marketplace. I believe that we will eventually get a bounce though, but I also anticipate that the 1.18 level will continue to be resistive going forward as it was once such significant support.
The 1.15 level has acted as support, and one would anticipate that due to the fact that it is a large, round, psychologically significant number. That of course always attracts traders in general, and with this being the case the bounce is expected. The hammer of course looked interesting, but the fact that we could hang onto the gains tells me that any strength in the Euro will only continue to be a selling opportunity.
Euro weakness
I believe that the euro will continue to show weakness against most currencies, but it could look a little healthier again some other currencies around the world they on the US dollar. After all, US dollar is a difficult currency to bet against right now, especially with the Euro.
I believe that the Euro cannot be bought into we get back above the 1.20 level, as it would show a significant return of strength and perhaps a trend change. I don’t anticipate that happening anytime soon though, so this point in time selling rallies will continue to be the way to play this market going forward in my opinion. Short-term traders will continue to do so, and I even believe long-term traders will jump on that trend as well. Since we broke down below the 1.18 level, it is possible in my opinion that we could go as low as 1.10 over the next several months.
