Euro falls against the US dollar during the week but find support at vital level

The EUR/USD pair fell during most of the week, reaching down to the 1.15 level before turning around to form a hammer. The hammer of course is a very bullish sign, and I think that longer-term value hunters are starting to come back into this market place to take advantage of the cheap Euro. I believe that the market will continue to find these value hunters in the marketplace, and if we can get some type of decent resolution to the Italian situation, we could turn around and regain all of the losses. The interest rates in America are rising, but I think a lot of this trait has been due to fear rather than interest rate differential.

Furthermore, the 1.15 level has been resistance in the past, and it also is sitting just above the 50% Fibonacci retracement level which will have a certain amount of viability for technical traders. I think that the market will be looking opportunity in the face if we do break to the upside, because I think it will be a slow and steady grind higher. When moves like this happened due to panic, they tend to over correct too quickly. However, if we break down below the bottom of the hammer and more importantly the 1.15 level, then I think the market could unwind rather drastically. While I have been pro US dollar for the summer, I think we may have overreached.