Euro falls significantly during the trading session on Monday as Italian bonds weigh heavily

The EUR/USD pair initially gapped higher at the open in Asia but rolled over again at the 1.1725 level. We then fell apart, reaching down towards the 1.16 handle, which almost wipes out the entirety of the move higher that we had seen from the recent uptrend. I think that the 1.1550 level will be targeted, as it is the bottom of that entire move previously. I think we break down below the 1.15 handle, this market could come undone rather drastically. I don’t know that we will, but at this point I think that rallies are selling opportunities that we should take advantage of.

Ultimately, the 1.20 level above will be a major resistance barrier, and ultimately I think that it’s very difficult to imagine buying this market for any length of time. We clearly are in a downtrend, and there is far too much in the way of uncertainty when it comes to the European Union to put money to work against the greenback, which of course is enjoying strength due to the rising interest rates, so this makes for a bit of a “perfect storm.” That’s what we been watching for some time now, and it’s going to take significant work to try to turn things around, something that I don’t see happening in the short term.