The Euro initially tried to rally on Tuesday but gave back gains as it looks like we are not quite ready to turn things around. Pay attention to the 10 year yield in the United States, that will be a major factor as to where we go next, as it has been for a while. The interest rate differential between the two economies continues to favor the Americans, but it has not been moving in the same direction as of late, hence the currency moves.

Nonetheless, we are still very much in a downtrend, and of course, the European Union has a whole host of problems that the Americans simply do not have. Because of this, it is likely that we will see this market see plenty of noise, but I still believe that fading rallies continue to be the way to go going forward.

Even if we were to break out to the upside, the 50 Day EMA comes into the picture near the 1.0350 level, and the 1.04 level has been massive in its implications previously as well. In other words, I think there are plenty of reasons to believe that this market falls from here. That does not mean that it goes straight down, but this is a market that certainly is in a downtrend, so therefore you need to pay close attention to it.

Any rally at this point in time has plenty of noise above to keep this market down, so I don’t forsee this changing attitude very quickly. With that being the case, I believe this market will eventually go looking to reach the 1.01 level underneath.

For a look at all of today’s economic events, check out our economic calendar.