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Christopher Lewis

The Euro has gone back and forth during the trading session on Monday, showing signs of gravity for the first time in several weeks. Looking at the recent rally, it does not take much to identify that we are overbought, so a pullback makes quite a bit of sense. In fact, I believe it is only a matter of time before the market drops a couple of handles. Do not get me wrong, the market is likely to find plenty of buyers underneath, but at the very least it would make quite a bit of sense that we could get gravity working against the Euro because things cannot go straight up in the air forever.

EUR/USD Video 09.06.20

You can see that in late February we had a similar move, which of course turned around to break down even further. I think we are going to continue to see a lot of this, and with the Federal Reserve meeting this week it is possible that perhaps a misstep could send this market straight back down, at least for the short term. Ultimately, though I think we are trying to form some type of larger range at the very least, as both central banks will continue to have a very dovish tone, so to think that one of these central banks will suddenly overpower the other one is probably asking a bit much, but we could get a run into the US dollar if we continue to see a lot of concerns out there when it comes to the global economy.

However, if we continue the “risk on trade”, then the Euro could make a serious attempt at the 1.15 handle. Breaking above there would turn this trend completely around to the upside.

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

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