The Euro has fallen again during the trading session on Wednesday to slice below the 50 day EMA. This is in reaction to the interest rates in America rising in the 10 year note. As that is interest rates continue to go higher, it does make the US dollar attractive, and therefore creates downward pressure. Underneath, the 1.20 level would be supportive and is likely to extend down to the 1.19 level after that.
If we were to see the market break down below the 1.19 handle, then I think the Euro could be in serious trouble. I would anticipate another two or three handles underneath could be targeted, but we will need to keep an eye on the 10 year yield to get a handle on where the US dollar may go. The US dollar does look as if it is trying to strengthen again, which could be a bit of a wrecking ball for a lot of assets out there. If that is the case, we could see the Euro either gain or fall based upon what is going on with the greenback as it is considered to be the “anti-dollar.”
To the upside, if we were to break above the 1.22 handle, then we could go looking towards 1.23 level, which is the beginning of major support. At this point, I see resistance extending all the way to the 1.25 handle above. That is a huge area to overcome, so I think it would take some type of extraordinary set of circumstances to see this pair to slice through it. I think we are a long way from that kind of bullishness, and at best we are looking at a sideways market.