EUR/USD Forecast: French Debt Crisis Keeps Euro Under Pressure

The euro continues to see pressure, as French debt is still a massive problem. With this, we are seeing euro weakness all over the markets. On the other hand, the dollar is strong as well. Can we find 1.10?

EUR/USD

The euro continues to drift a little bit lower, and that does make sense considering that we are starting to see interest rates in several European economies rise.

The French fiscal problem continues to be a major concern. With the French fiscal budget still remaining a question mark as to whether or not it can get through Parliament, that continues to put pressure on the euro itself. Banks in Europe are struggling at the moment also, and of course, we have questions about contagion because, the next thing you know, we are starting to see Greek and Italian debt sell off pretty drastically as well.

I think this is a sell-the-rally market.

With all of that, and the United States likely to continue to be the beneficiary as traders look for safety, and of course, interest rates in America continue to climb as well for inflationary reasons, it makes sense that we see downward pressure. I think this is a sell-the-rally market. It probably continues to be.

I'd be very interested in shorting the euro near the 1.13 level, possibly the 1.14 level. To the downside, the 1.10 level is a potential target. We'll have to see whether or not we can actually make it down there.

The massive sell-off has been brutal. This is clearly a situation where people are running away from the European Union because the DAX and the CAC both look like this as well. Although it's squarely and firmly placed at the feet of France for the most part, as long as those issues remain, the euro is going to struggle.