The euro took off Friday as we continue to see a lot of noise around the parity level. By doing so, the market looks as if we are going to continue to see this market as one that is trying to break down through parity, and if and when we finally do that, it’s likely that we will see a significant move lower. The algorithms are typically tripped when you get a daily close below parity, so it’ll be interesting to see how this plays out. That being said, the market is likely to see a lot of negativity, but we might get a short-term bounce. In fact, that’s exactly what I’m expecting in the short term.
Looking at this chart, it’s likely that we could go to the 1.02 level above, which is very noisy and it could cause a little bit of trouble. If we break above there, then it’s likely that we go to the 1.04 level. The 1.04 level was previous support, so “market memory” could come into the picture and show signs of hesitation. With that being the case, I’d be a seller there as well. As soon as we see signs of exhaustion after the rally, I think it suggests that we are going to start selling off again.