The EUR/USD pair fell during the session on Monday, testing the 1.07 region. This is a pair that looks like it’s getting ready to make a “lower high”, and as a result I believe that the market is going to continue the longer-term downtrend. Quite frankly, there is nothing out there that leads me to believe that the Euro is going to strengthen anyway, so feel perfectly comfortable selling this pair. I think if we can break down below the bottom of the range for the Monday session, it is very likely that we will then head to the 1.05 handle.
As you can see on the chart, the yellow box above is an area that has been quite responsive when approached. I believe that there were still be significant amounts of sellers in that area, so quite frankly even if we get above the current area I think we are still going to struggle.
50 day exponential moving average
The 50 day exponential moving averages just above, and should act as dynamic resistance. Longer-term traders like this moving average, so they will pay attention to it. Because of this, I believe that this market will head to the 1.05 level where we had seen quite a bit of support recently. We could get below there, and if we do I think we had parity at that point. Quite frankly, that’s my longer-term analysis, parity between the US dollar and the Euro.
In the meantime, I am selling short-term rallies as they appear, as they do not believe that there is much other driving the Euro higher other than people trying to pick up value. However, there’s probably not much in the way of value to be had. After all, we saw a story about the issues in Greece, and of course the European Central Bank and its liquidity issues. They will continue to flood the markets with liquidity, while the Federal Reserve has step away from doing so. With that, I believe we go lower.
