The Euro rallied a bit during the week, reaching as high as 1.15 before rolling over. We broke the top of the hammer from the previous week which was of course a very bullish sign, but the fact that we have turned right back around and aimed for the 1.13 level certainly doesn’t look good. If we were to break down below the 1.13 handle, breaking the back of the hammer, then I think we would continue to go down to the 1.11 handle next. This is a market that has recently broken through a major uptrend line, so now I think we go much lower. The US dollar is going to continue to strengthen due to the Federal Reserve raising interest rates, and I think it should continue to be a major problem in this situation.
Beyond that, the Italian debt situation continues to weigh upon the Euro as well, and therefore I think we are ripe to continue to go lower. Ultimately, I think this market needs to break above the 1.15 handle to be one that you can start buying, and then I think at that point we would probably go to the 1.18 handle. Overall, I think that the market continues to be choppy to say the least, but certainly there seems to be a lot of heaviness to this market. Overall, I believe that the sellers have the power in the market.