- The euro continues to weaken as repeated rallies fail and downward momentum holds.
- Breaking major trend support reinforces a bearish outlook, with targets near 1.14 and potentially 1.11, while any short-term rebounds are likely to face renewed selling pressure.
The Euro has rallied a little during the early part of the Tuesday session, only to fail and roll over again. The Euro has been in a downtrend for a while, and daily, I tell you that I am bearish on the Euro, and I do not see that changing anytime soon. As we have broken through a pretty significant support line and this uptrend line that had been part of the market since March, we can now start to think along the lines of a potential downtrend line over the last two months or so.
1.14 is Likely the Target
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I do think that, given enough time, we probably go looking to the 1.14 level underneath, which is where the 200-day EMA currently sits. Whether or not we can break down below there remains to be seen, but if we do, then it really opens up the trap door on the Euro, probably sending it to 1.11. If the market drops from here, then a short-term rally could appear again, like we have seen multiple times, but any signs of exhaustion are more likely than not to be sold into.
If we break above the 1.17 level, then it could open up the possibility of a move to the 1.18 level, where we do see quite a bit of resistance. Ultimately, the US dollar continues to see strength against most currencies, and the Euro will not be any different. This is a nice, gentle downtrend. The question is whether it will be a pullback to 1.14 or something bigger. There is a US dollar shortage around the world at the moment, and for reasons far beyond the scope of this video, I do favor the US dollar against a multitude of currencies, and the Euro is certainly one of them.
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