Euro Weakness is Still Broad-based

Euro Weakness is Still Broad-based

Dollar strength has been the main trend for most of this year — but some currencies have met selling pressure more than others.  Most of the market’s bearish activity has been directed toward the Euro, which is trading lower against virtually every major counterpart in the currency markets.  “For investors, this type of trend activity has some important implications,” said Frank Williams, forex markets analyst at Teach Me Trading.  “Specifically, this means that a weaker currency value will be helpful for European export companies looking for new foreign consumers.”

So while most of the positive strength has been seen in the US Dollar, and in assets like the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), there are some critical issues that should be considered when looking at the prospects for both the Euro and the Australian Dollars.  For these reasons, it is important to have some understanding of where all of these currencies rest in relation to one another.  Since the position of the Australian Dollar is quite familiar to readers of this site, we will next look at the recent chart activity in the EUR/USD, which poses the position of the Euro against that of the US Dollar.

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EUR/USD – Euro vs. US Dollar

Critical Resistance:   1.15

Critical Support:   1.0510

Trading Stance:  Bearish

EUR/USD Forex Strategy:  Market support in the EUR/USD now rests just above the 1.05 mark.  This support area is helped in buy positions as the MACD indicator is also moving strongly into bullish territory.

For the most part, we are still seeing strong downside in the EUR/USD.  This has been the case against most of the major currency pairs but there is some potential for upside in the Euro since we have moved into positive territory for the MACD indicator reading and this does bode well for the currency in the weeks and months ahead.  If we do start to see some upside activity in the Euro it will improve the prospects for the Australian economy as it will make the country’s export products more attractive to foreign consumers.