The EUR/USD pair fell during the session on Wednesday, although we did see a bit of a bounce towards the end of the session. The 1.2850 level looks to be offering a bit of support, and this of course makes sense based upon the cluster of noise that we saw back in March. With that being the case, we feel that this market could have more downside, and that the bounce may have simply been traders closing out there positions to go home.
Going forward, we believe that this market will have significant pressure on a, and to be honest the truly bearish case wasn’t made until the session on Wednesday when the GDP numbers came out negative from the European Union. The fact that they are negative, and were more negative than anticipated certainly brings the case for a lower Euro, and possibly even more monetary policy action out of the European Central Back. Because of this, we think that this market will be a “sell only” type of market going forward. This isn’t to say that the market will bounce, just simply that when this market bounces, we will be looking for selling opportunities.
There is a lot of noise below current levels though, and of course this will weigh upon the sellers. This is why wouldn’t surprise as the sea little bit of a bounce right away, but certainly the 1.30 level will act as significant resistance now. That hasn’t to say that we can get above it, because this pair does have a history of being rather choppy and erratic to say the least. Because of this, we think that there still easier ways to trade the Euro, but in the end it appears that the US dollar is primed to become the favored the currency of the Forex world for the summer, if not the rest of the year.
We believe that a break down below the 1.2750 level opens up the floodgates, and that the Euro would absolutely fell apart at that point. This is a necessarily will we expect to see, just rather what we see on the charts as being possible.
Written by FX Empire