The euro has initially fallen during the trading session on Tuesday but turned around to show signs of life again. By doing so, the market looks as if it is trying to build up enough momentum to finally break above the 1.10 level above, which looms large as a large, round, psychologically significant figure, and of course the 61.8% Fibonacci level is coming into the picture as well.
All things being equal, this is a market that I think will continue to see a lot of noisy behavior, and it seems as if every time we pull back, there are buyers willing to jump into the market and pick up euros. That being said, it’s also worth noting that the trading environment right now is one that suggests traders believe that the Federal Reserve is going to continue to see loosening monetary policy down the road, and therefore it does make a certain amount of sense that the US dollar falls. After all, the euro itself is considered to be the “anti-dollar” and does trade as such.
Underneath, it’s worth noting that the 50-Day EMA is starting to break above the 200-Day EMA, kicking off the so-called “golden cross” which is a very bullish turn of events. The market is very likely to continue to be noisy, and we are a bit stretched at this point, but it shows that there are plenty of buyers underneath at the moment, therefore it’s probably only a matter of time before we get some type of breakout. If we do break above the 1.10 level, I believe that the euro will go as high as 1.1250 above.
Underneath, the 1.0850 level, which is an area that a lot of people will step in and find buyers. Ultimately, this is a situation where we are at the top of a short-term consolidation area, and it seems as if we are seeing quite a bit of pressure enter the market and eventually it looks as if we will break out. However, we don’t know for sure yet, and simply waiting for a daily close above the 1.10 level would be worth noting as a significant change of attitude and breach of downward pressure.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.