The EUR/USD pair initially rallied during the session on Wednesday, but struggled at the 1.09 handle. With this, we ended up falling and forming a shooting star like candle, slamming into the 1.08 level, and even below there. There is a significant amount of support just below at the 1.0750 level, and as a result I think that if we can get below there the markets will continue to go down towards the 1.05 handle. But frankly, I expect to see this happen given enough time.
I also believe that rallies will continue to offer selling opportunities as the yellow box above signifies the resistive barrier that I see in this market. The 1.10 level of course is the epicenter of this resistance, as we have seen the sellers come back into this marketplace time and time again. I believe that the market ultimately should break down from there, and as a result every time we rally I think that we will fail.
Selling rallies, selling breakdowns
So I am selling rallies as I had mentioned. But I am also selling a break down below the 1.0750 handle, as I believe that would be a signal that the markets going to go much lower. I also think that the 1.05 level will get broken to the downside given enough time, and that we will head to the parity level. Granted, there was a bit of confusion after the FOMC Meeting Minutes were released during the session on Wednesday, but I think at the end of the day the market still recognizes that the United States is much closer to raising rates than Europe is, so it really doesn’t matter whether or not it happens in June or September. Anyway, the ECB isn’t even close to raising rates, and it is probably going to be very likely to continue to keep its monetary policy extraordinarily loose. This of course should continue to work against the value of the Euro. With that, I remain bearish.
