Dominant Downtrend in Euro Persists

I thought the euro's three month recovery rally from the Nov. low would propel the currency to the 1.2500 area, but failed at 1.2320 prior to reversing to the downside with a vengeance. The rally reprented a period of euro strength that worked off the oversold condition prior to the resumption of the dominant downtrend. At this point, although we could manufacture multiple reasons why the euro should be stronger against the dollar, current perceptions of still-rising U.S. interest rates, a sluggish European economy, and the continued threat of religious unrest in many european capitals is attracting flows into dollars (and into Yen and gold to a lesser extent)... Until those perceptions change, the dominant downtrend in the euro will persist...

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