The euro reached a high of 1.4939 in the Spring of 2012, and has seen a steady decline ever since.The Greek debt crisis and the the credit rating downgrade of several eurozone countries has pressured the euro downwards. In 2012 the euro performed poorly reaching a high of 1.3485 early in the year and declining rather steeply thereafter. As things stand it now looks like it is headed towards its June 2010 low of 1.1876 and perhaps even lower.
On the euro weekly chart we can observe that a trading channel has developed in the past year or so. A pattern seems to have emerged and noticeably Zone B's high (1.4246) corresponds roughly to the midway point between zone A's high and low. Similarly, zone C's high (1.3485) occurs roughly between zone B's high (1.4246) and low (1.26 or so).
Zone C is of great interest this month of June 2012. Several thing can happen here. If the euro were to remain within the same trading channel and follows the pattern that has evolved in it, then if we were to assume that the mid point between zone C's high of 1.3485 is the resistance area of 1.26-1.2650, then we can indeed expect the euro to drop to the June 2010 low of 1.1876 where it will meet with renewed buying interest. The euro may be expected to form a low in and around that area , but given that its high for 2012 stands at 1.3485 we could see it drop lower that.A low of in and around 1.16 was formed in 2005 and we could see the euro revisiting this low..
It is not clear if it will drop this low directly or if we can expect a rebound of sorts.The weak figures of the NFP gave the euro a boost last Friday closing at 1.2433, but it will likely be short lived and probably fail at the 1.26-1.2650 area of previous support where it will likely meet with renewed selling interest. Several rebounds of this nature cannot be ruled out in the weeks to come but they will likely fail at the 1.26-1.2650 area.
The areas to watch out for in the coming weeks are the 2010 low of 1.1876 (buy) and the support level at 1.26-1.2650 (sell).