At this moment, it looks like any rally will more than likely be faded as we continue to see plenty of negativity.
The euro had another weak showing for the month of March, as we had previously been selling off. The euro continues to suffer at the hands of the interest rate differential between it and the United States, which continues to widen. Ultimately, the 1.0850 level is an area that had offered a bit of support, so retesting that is something that will happen almost immediately. If we can break it down below there, then we will look to the 1.07 level. At that point, it will be interesting to see if anybody chooses to defend the euro.
The pair has been in a downtrend for quite some time, so it should not be a huge surprise to see that we got all the way down here. The 1.1150 level has offered short-term resistance on the weekly chart, and I believe it extends all the way to the 1.12 handle. In other words, there is a lot of noise above that we need to get beyond in order to change the overall attitude of this market. I do believe that the euro continues to struggle overall, but a lot of the massive selling is potentially over at this point as we are testing such a major support region.
You will notice that the 50-week EMA has crossed below the 200-week EMA a while ago, and it is starting to widen as far as the distance between the two moving averages is concerned. This suggests that there is still plenty of momentum to the downside, but we are getting so close to major support levels that I think we are going to decelerate the downtrend.
If we were to turn around and break above the 1.12 handle, then we have the possibility of an attempt to reach the 1.15 level above there. This would obviously be a very strong counter-trend move, which would be something worth paying attention to. Obviously, we would need to see some type of fundamental reason for this market to turn around like that, but obviously, anything is possible. Perhaps a peace agreement in Ukraine might be the catalyst, but at this point, we can only trade what we see at the moment. At this moment, it looks like any rally will more than likely be faded as we continue to see plenty of negativity.