The euro fluctuated on Friday and pierced the 1.17 level. That being said, the market looks as if the downward pressure should continue, and if we break down below the 1.1685 level, then the market should continue to go lower, perhaps reaching down to the 1.16 level. That being said, the market also has the 50-day EMA sloping lower, and it makes sense that we will continue to see sellers.
At this point, the market continues to pay close attention to the interest rates in the USA, and if we continue to see them strengthen, that will drive up the demand for the greenback. The market continues to see a lot of noisy behavior, so it is likely to be one of those markets you need to be cautious with, at least until we get some type of impulsive candlestick that we can get involved with.
If we do break down below the 1.1685 level, then it is likely that we will see an acceleration to the downside. At that point, I would probably get aggressive to the short side, as the market has continued to see a lot of noisy behavior. On the other, if we were to turn around and break above the 1.1750 level, then it is likely that we will go looking towards the 50-day EMA above. That being said, the 1.18 level is where the 50-day EMA is sitting, so it does make sense that we would see that as a bit of a short-term ceiling. Breaking above there would obviously be a very bullish sign, reaching towards the 200-day EMA.
The market continues to favor the downside overall, but it is not until we break above the 1.19 level that the overall trend will have changed, and it is likely that we would go looking towards the 1.20 level, and then perhaps even higher than that. This is a market that will be difficult to hang onto, but I am much more comfortable fading short-term rallies that show signs of exhaustion, as it has worked for quite some time. I think the one thing you can count on is choppy behavior, so if nothing else you can use this as a secondary indicator for US dollar strength.