Euro falls to vital 1.20 level during the Tuesday session

The EUR/USD pair broke down during Tuesday trading as we continue to see strength in the US dollar based upon higher interest rates. With the ECB on hold, it’s possible that we do continue the breakdown, but quite frankly with the jobs number coming out on Friday, I think that will limit some of the downside pressure, at least over the next couple of days. I think the market won’t want to get too far ahead of itself in front of that announcement, but the treasury markets could force the issue. Because of this, you should keep an eye on the 10-year yield, and the farther it goes above 3%, the stronger this move to the downside will be. However, if we break above the 1.2150 level, the market could rally significantly, perhaps reaching towards the 1.2350 level.

Any semblance of an uptrend is hanging by a thread right now, and the messy trend is one that is going to be difficult to trade for any length of time. Looking at the longer-term charts, we had a great signal to the 1.32 handle, but things seem to have gotten rather reckless as of late, and that of course makes this pair especially vulnerable as the EUR/USD pair is the domain of high-frequency traders. Those types of moves tend to be very short-term and erratic, which of course makes this market a bit more difficult to deal with than many of the other ones.