The EUR/USD pair fell during the session on Friday again, testing the 1.05 level. At one point during the day, we actually broke below that level, which of course for me is a very negative sign. Ultimately though, we turned back around and closed at basically the handle. I still think this means the market is going to break down longer-term, and rallies at this point in time will offer value in the US dollar. There’s really no reason to buy the Euro, as buying down here is simply trying to catch a falling knife.
There is a massive amount of resistance above, especially the 1.10 level. With that, the market looks as if it is ready to sell off every time it rallies, and I believe that most traders out there are looking for opportunities to do so. Don’t get me wrong, I believe that this move is a bit “long in the tooth”, but at the end of the day there’s no way to buy the Euro in the present economic condition that we find the European Union in.
Ultimately, it’s a “sell the rallies” opportunity
Ultimately, I believe that it’s a “sell the rallies” type of opportunity that you are going to see in this market again and again. It’s going to be a matter of being patient for those rallies in order to take advantage of perceived value in the US dollar. I don’t necessarily think that the US dollar is getting strong for any other reason than the fact that the rest of the world is getting weaker overall. This is especially true when it comes to Europe, so I think this pair continues to suffer in general. In fact, I have been shorting the Euro against just about everything out there, and of course buying the US dollar. In that sense, this is essentially a “perfect storm” as I believe this market heads down to the parity level given enough time.
