EUR/USD Technical Analysis March 5

The EUR/USD pair broke down during the session on Wednesday, slicing through the 1.11 handle. With that, it looks as if the markets ready to continue to go much lower, and I believe that we are first going to test the 1.10 level. That being the case, the market should continue to sell off every time we rally, as the bearish pressure is simply far too strong, and there are far too many problems with the European Union right now.

There is concern about deflation in the European Union, and because of this, I believe that the European Central Bank will continue to have to offer liquidity for the marketplace, and as a result the Euro should continue to sell off over the longer term. On top of that, if we break down below the 1.10 level, we should then go to the parity level. Because of that, I believe that this is a short-term selling opportunity, but if we get down below there, it becomes a longer-term sell and hold situation.

If we rally from here, I don’t see how we get above the 1.15 handle, as it is so resistive. Ultimately, this pair should continue to favor the US dollar as the Federal Reserve has left quantitative easing, and of course there’s no way to argue with the whole idea of been in a downtrend at this point. The candle for the Wednesday session is of course closing towards the bottom of the range, and that of course is very negative.