The Euro broke down significantly during the training session on Monday as the week has opened dollar positive. By breaking below the 1.09 level, it looks as if the US dollar will continue to strengthen overall, much to the chagrin of buyers of the Euro. That being said, there are a whole plethora of reasons for the Euro continuing to go lower, not the least of which will be the poor economic figures coming out of Germany, which is essentially most of what the Euro moves on.
That being said, we could get a short-term bounce but obviously a 1.10 level is now massive resistance, and then of course the 50 day EMA is sitting just above the most recent high. It is starting to slope lower, and the momentum is starting to pick up overall to the downside. Ultimately, this is a market that is looking at the differential between economic growth, which is still positive in the United States and anemic at best and the European Union. Furthermore, bonds in the United States continue to offer positive yield, while the European bonds are mostly made up of negative yields.
To the upside, signs of exhaustion, meaning long wicks to the upside, should be nice selling opportunities as the market has certainly been negative for the last 18 months or so. That doesn’t mean that the market will collapse immediately, but as we continue to chop back and forth, the one thing that cannot be denied is that the downward pressure has been rather steady. Economically and fundamentally, very little has changed over the last year, so at this point one would have to assume that the market is going to go looking towards the gap in this pair, closer to the 1.0750 level. It may take quite some time to get there though.
That being said, we could get a short-term bounce but obviously a 1.10 level is now massive resistance, and then of course the 50 day EMA is sitting just above the most recent high. It is starting to slope lower, and the momentum is starting to pick up overall to the downside. Ultimately, this is a market that is looking at the differential between economic growth, which is still positive in the United States and anemic at best and the European Union. Furthermore, bonds in the United States continue to offer positive yield, while the European bonds are mostly made up of negative yields.
To the upside, signs of exhaustion, meaning long wicks to the upside, should be nice selling opportunities as the market has certainly been negative for the last 18 months or so. That doesn’t mean that the market will collapse immediately, but as we continue to chop back and forth, the one thing that cannot be denied is that the downward pressure has been rather steady. Economically and fundamentally, very little has changed over the last year, so at this point one would have to assume that the market is going to go looking towards the gap in this pair, closer to the 1.0750 level. It may take quite some time to get there though.