Here’s what I think is going to happen, finally. The EUR-USD needs to test that 1.2000 level and get it over with already. It’s an inevitable test the market keeps procrastinating. Maybe bears are truly afraid of holding on to see that test. Can it be that bears are so non committed they don’t even have the nerve to hold on for a test of key support? It sounds strange but this is a test that is a long time in coming. For once and for all, I think the market needs this test to know where they are in relation to the European crisis. If it holds, markets can reverse and go back to the highs again. If it doesn’t hold, well then, the chips will fall where they may. The Dollar has much longer term resistance up near the 86 level. As you can see from the long term chart there are 3 different channel lines just overhead. That’s part of the Euro 1.2000 test. What happens there will go a long way to determining not only how the rest of the year goes but could determine the Presidential election as well.
By the way, while we are talking about candidates creating a confidence buzz, the Dow bottomed the week of MARCH 28 in 1980 and stayed up through the entire election season. We haven’t heard the comparisons to Jimmy Carter in a long time. I might be wrong about this but I think this is the first President who truly has been compared to Carter. If that’s the case, the challenger is hardly Ronald Reagan because if he was the stock market would’ve taken a much greater liking to him by now.
Click chart to enlarge