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Christopher Lewis

The Euro broke down significantly during the trading session on Thursday, slicing through the 50 day EMA and reaching down towards the 1.17 level. Ultimately, I do think that we continue to go lower, basically due to the fact that we have recently formed a massive negative candlestick pulling back from the uptrend line that I have marked on the chart. At this point, I think that we are likely to go back towards the lows at the 1.16 handle, an area that has caused a bit of bullish pressure recently. That being said though, I think it is only a matter of time before breakthrough there as well.

EUR/USD Video 16.10.20

All things being equal, the technical analysis certainly looks like we are trying to break down, but that does not mean that we cannot rally occasionally. After all, hope burns the eternal, and that typically works against the US dollar. Nonetheless, the situation around the world continues to be deteriorating, and of course the European Union is struggling with deflation and it looks like things are only going to get worse for Europe.

That being said, I do think that the 1.15 level will attract a lot of attention as it is a large, round, psychologically significant figure we broke out of, and of course the 200 day EMA is racing towards that level. All things being equal, I do think that we probably need to pullback if for no other reason than the fact that the market has gotten far ahead of itself recently, and now it is likely that we will continue to see the sellers get aggressive.

For a look at all of today’s economic events, check out our economic calendar.

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