The EUR/USD pair broke down during the session on Friday, finally clearing the 1.10 level decisively. This of course was a reaction to the nonfarm payroll numbers coming out stronger than originally anticipated, which of course brings in more money to the United States. The Federal Reserve is expected to raise rates much sooner than the European Central Bank, so it makes sense of this market continues to fall overall.
With that, I believe that this market now is clear to go down to the parity level, as we not only broke down below the 1.10 handle, but we also managed to close the very lows of the range for the session. With that, I feel that the market will have quite a bit of continuation, and quite frankly, anytime this market rallies - I am a seller. After all, there’s no way to think that the Euro is going to suddenly get stronger, as there’s very little to suggest that it should.
European Central Bank.
The European Central Bank has made it very clear that they are willing to do whatever they can to bring down the value of the Euro. Because of this, I anticipate that the extraordinarily loose monetary policy will continue, and of course the value the Euro will continue to dwindle against most currencies, most certainly, the US dollar as it is one of the strongest currencies in the world right now.
With this, I don’t really see that we will be able to break above the 1.11 handle, and quite frankly when you look at the longer-term charts, there are plenty of reasons the think that the 1.10 level was a massively supportive area. Ultimately, I think that we go down to the parity level, but it will take a long time to get down there. In the meantime, I think it’s just simply a matter of selling rallies as they appear. I certainly would not want to have anything to do with buying this pair right now.
