The EUR/USD pair fell during the session on Friday, breaking the bottom of the extremely long legged doji that had formed during the Thursday session. That being the case, this of course brought in more sellers into this already beaten-down market. The problem we run into now though is the fact that the 1.28 level does course offer quite a bit of support going forward. This market looks to be breaking down a bit, but the reality is that the area is a significant support area, and as a result it will take quite a bit to break it down.
If we do manage to break down below, this is a significant development in this pair. This would have the Euro falling apart, and the market perhaps running as well as the 1.25 level. We actually use the 1.27 level as the bottom of this support “zone”, and as a result we need to see the market close below that level on a daily chart in order to start selling at this point.
We see no reason to buy the Euro at the moment, even though it is in danger of bouncing from this low level. That bounce should bring in more sellers going forward, and as a result we think that the various pressure will continue. The US Dollar has broken above the 84 handle in the US Dollar Index, something that is not done in several years. Because of this, we feel that this market more than likely will be more a statement on the Dollar, then the Euro.
The European Union is currently struggling, although some expect a little bit of a base is being put in to the economy over there. That being the case, while the United States continues to grow, this of course is going to be more of a pro-Dollar move. We are not buying, we are simply looking for resistive looking candles to start selling, or of course that breakdown which of course should have the entire market piling on short positions in this pair.
Written by FX Empire