The EUR/USD pair fell hard during the session on Wednesday after initially trying to rally, after the Federal Reserve announced that they were continuing the cutting off of quantitative easing. Since that being the case, it appears that the US dollar will continue to strengthen overall, and that the industry differential should start to head back in favor of the US dollar. With that, and the fact that German bonds are yielding negative rates at this point, there’s absolutely no reason to think that the Euro should continue to be anything but weak against the US dollar.

Ultimately though, we could get a bounce from here. I know that the candle close at the very lows, at roughly the 1.2850 level. The real support is down at the 1.28 handle based upon longer-term charts though, so a bounce from anywhere in this general vicinity would be a huge surprise. Any bounce though will be sold by me and just about everybody else in the world on the short-term charts. If we can break down below the 1.28 level, I feel that the market would then head down to the 1.25 handle, the next round number.

Deflationary concerns still persist.

Deflationary concerns in the European Union still persist of course, and as a result we should continue to see a weakening Euro. And does it mean that it will be a straight shot down, and I could see this market breaking higher, perhaps as high as 1.3250 if the right conditions show themselves. However, it is not until we get well above there that I would even consider buying the Euro, so for me this is still a “one-way bet.”

With that being the case, I think that I will continue to look to short-term charts for selling opportunities, as well as the aforementioned 1.28 level, assuming that it gets broken on a daily chart. Either one of those has me selling drastically. The alternative scenario of course is a resistant candle above, after a bounce.