The month of October wasn’t very good to the Euro, as we broke back towards the recent lows. The 1.13 level should be somewhat supportive, because we had found so much in the way of buying pressure from that area that eventually had the market going towards the 1.18 handle. At this point, it looks as if we will almost certainly test that area yet again, and very possibly break down below there. If we do, then I think the market will go to the 1.12 handle, possibly even the 1.10 level after that.
Most of this comes down to the US dollar overall, and it’s significant strength. At this point, I think that the interest rate outlook for the United States continues to be very strong, and the Federal Reserve has shown no proclivity to pull away from this. Because of that, I think this pair will continue to fall, the question is whether or not we will bounce between now and the breakdown. At this point, it looks as if the 1.15 level is going to offer significant resistance, so I would anticipate that any rally from here will probably have that selling pressure.
The 1.12 level is congruent with the 61.8% Fibonacci retracement level, an area that of course will attract a lot of attention and has previously seen a cluster during March 2017. Because of this, I think that there will be a bit of a firefight at the 1.12 handle, but with the interest rate differential being the way it is, I suspect that level will probably give way as well. I have no interest in buying until we get a daily close above the 1.15 handle, as it would be the market opening up a path to the 1.18 handle.