• The euro has drifted a little bit lower during the trading session against the US dollar on Thursday as we continue to see selling pressure.
• It is worth noting that the euro did bounce a little bit later in the day, so it suggests at least that we have some type of support underneath.
• This area, right around the 1.15 level I think, continues to be very important, and with that being the case, it is likely that the market may bounce around here.
• But if we were to break down below the 1.15 level, then it opens up the possibility of a drop down to the 1.14 level, where we see the 200-day EMA.
   

Short-Term Rallies

Short-term rallies are possible here with the 50-day EMA above offering a bit of a short-term barrier. I think that could end up being a short-term ceiling for that matter, as there is also a downtrend line there. If we were to break above there, then the 1.17 level becomes the next target, followed by the 1.18 level.
 

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The interest rate differential favors the US dollar and probably will for some time. So with that being the case, I prefer fading short-term rallies that show signs of exhaustion, as we have seen multiple times since the September FOMC meeting.

Longer term, if we can break down below the 1.14 level, it is possible that we could drop all the way down to the 1.11 level, which is my longer-term target. I expect to see a lot of choppy back-and-forth volatility as we are between the 50-day EMA above and the 200-day EMA below. Over the longer term, I think that we are in the midst of some type of bigger topping pattern, and it is worth noting that there are a lot of concerns that the Federal Reserve will not be able to cut rates as quickly as everybody wanted because of a delay in jobs numbers.

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