Euro vs US Dollar Technical Analysis
The Euro rallied quite nicely during the early hours on Monday as we bounced significantly from the 1.07 level. The 1.07 level of course is an area that has been important multiple times, but really at this point in time, it looks like the euro is just doing one bounce to another, going from one round figure to another. If you look at the longer term charts, you can see that we have been consolidating between 1.06 at the bottom and 1.10 at the top for what seems like a lifetime.
Ultimately, this is a pair that is trying to sort out what’s going to happen with the Federal Reserve more than anything else, because we already know that the ECB has cut rates and probably will continue to do so before it’s all said and done. It’s probably worth noting that we just formed a nice double bottom at the 1.07, so I think given enough time, we could really take off to the upside and try to reach the 1.08 level.
The 1.08 level, besides being a large round psychologically significant figure, is also an area where we have seen some support previously. Because of this, market memory will come into the picture, and I think you have a situation where traders will continue to look at this through the prism of going from one level to the next. If we were to turn around and break down below the 1.0675 level, then we probably drop down to that extreme negative level of 1.06. However, it doesn’t look like we’re in a hurry to do that.
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