There is no denying the trend has been higher as prices have experienced a steady rise since late July. Within that time frame the Euro appreciated 10% but my initial take away is we may have put in an interim top last week. After multiple attempts March futures were unable to get through $1.33 and with the fourth consecutive day of losses today one can see a trade under the 20 day MA; identified by the dark blue line. A settlement under this level indicates to me we should come down near the 50 day MA; identified by the light blue line which would also mean we challenge of the trend line that has supported for the last 6 months.
My recommendation is use the Fibonacci levels on the chart above as your targets on the way down. Regular readers probably know where I?m going with this but my favored play is short futures while simultaneously selling out of the money puts 1:1. A 50% Fibonacci drags futures back near under $1.27 represents roughly a $5,400 move in the futures market per contract from current levels. Depending on the exact option sold you should be able to pick up 30-50% of that appreciation if you factor in the loss in the options verses the gain in the futures contracts.
The strong currency has done very little to help the economies in Europe recover so perhaps some back and fill in the coming weeks would help goose exports and give a bit of relief to countries that should benefit from a weaker currency. Not to mention the other European currencies appear that they should back off as the Swissie and Pound have been very correlated in recent weeks & months.