• The euro has gone back and forth during trading on Thursday, really not gaining or losing any ground worth mentioning at this point.
• It looks like the euro isn't a bit of consolidation, but what I would point out is that since the FOMC interest rate decision and subsequent press conference, the euro has fallen basically about three handles from the middle of that press conference. So that tells you most of what you need to know.

We have broken through a major uptrend line, and we are below the 50-day EMA, which I think we may try to test again. There is the potential, assuming that it comes out, that we get CPI numbers from the United States within the next 24 hours. That might have an influence, but really, at the end of the day, this is a market that has clearly shown it's not ready to go straight up in the air.

I think sideways action with a little bit more down-trending momentum than anything else continues to be the way forward. If we break down below the 1.1550 level, then it opens up a move down to the 1.14 level, where we will intercept the 200-day EMA. The longer-term trend for the dollar has been pretty weak over the last several months, but it does look like, at the very least, we are trying to find gravity.
 

(Click on image to enlarge)

Significant Resistance Above

It is worth noting that the area around 1.18 was significant resistance, as it had been both support and resistance in the past. And I do think that we probably have further to go, as everybody has got a little too bearish on the dollar for some time. And in fact, just a couple of weeks ago, I heard that the dollar was going to be extraordinarily weak, and it just continues to strengthen from there. So, I like fading rallies that show signs of exhaustion.

More By This Author: