Euro fails to hold rally against dollar during the week
The Euro tried to rally against the US dollar during the week but found enough resistance near the 1.1850 level to turn around and form a rather negative candle. At this point, we have broken through a hammer at the 61.8% Fibonacci retracement level a couple of weeks ago, and it now looks as if we are ready to go much lower.
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Because of this, I think that the market will try to wipe out the move and take out the 1.1550 level. If we do, then we will test the psychologically important 1.15 level underneath. A breaking through that level could be catastrophic, sending this market down to the 1.10 level. I think this is possible, especially if the Italian bond situation continues to be a major issue and of course geopolitical concerns in the union continue to be a major issue as well. I think that we are going to see US dollar strength over the summer, and at this point rallies are to be sold. In fact, I don’t have a scenario that has be buying this market quite yet. I’m not saying it can’t change, just simply that every time I try to put money to work to the upside, I’ve been proven wrong. Longer-term, there will eventually be buyers but certainly doesn’t look like they’re coming into the market right now. I think the 1.1550 level is all but given at this point for most traders.