At this point, we have to ask whether or not the Euro is a failed currency?
- The EUR/USD currency pair has broken down significantly during the trading session on Friday, losing almost 1.5% by the time we got to the afternoon session in New York City.
- This is a market that continues to show a lot of weakness, and I think that continues to be the case going forward.
- The 50-Day EMA sits above parity, and has been like a downtrend line for quite some time.
EUR/USD Parity Level as Resistance
I think we have a scenario where the market remains a “fade the rally” type of situation, therefore I think we probably will continue to look at this through the prism of whether or not we can pick up value in the greenback. The parity level should be resistance, assuming that we can even get there. After this massive selling move, I think it is probably only a matter of time before the sellers come in and pushes market lower, but I would like to see a rally as I don’t want to “chase the trade.” The market has been in a downtrend since the Great Financial Crisis, when the EUR/USD pair reached the 1.65 level.
The size of the candlestick is rather strong, and the fact that we are closing so low in the overall range tells me just how negative this pair truly is. Pay close attention to the interest rate situation in the United States, because of they continue to rise, that’s going to continue to push this market lower. Ultimately, the European Union has to worry about a whole host of problems that the United States does not have to, not the least of which will be whether or not there is enough energy to run the economy. The market will continue to be very noisy, but I think it is more likely than not going to be one that still favors the overall downward pressure.
The 0.95 level would be a large, round, psychologically significant figure that a lot of people would pay attention to, and a level not seen since just after the Bureau was created. At this point, we have to ask whether or not the Euro is a failed currency? At this juncture, I would look at this as a one-way trade, but that doesn’t necessarily mean you jump in and start chasing what has already been a huge move lower.