The Euro has broken higher during the trading session on Monday to break above the 1.06 level. At this point, the market looks as if it is trying to figure out where it is going next.
The Euro has rallied a bit during the trading session on Monday to break above the 1.06 level. This is an area that will attract a certain amount of attention, but at this point, I believe that the Euro is probably living on “borrowed time.” After all, even though Christine Lagarde suggested that the European Central Bank was open to a 25 basis point rate hike had people buying the Euro. That being said, there is still much less hawkish than the Federal Reserve, and of course, there is a serious issue when it comes to risk appetite out there. In other words, this is a market that I think you should be fading, not buying.
If we break below the 1.06 level, I think at that point the Euro will continue to fall, testing the 1.05 level. Keep in mind this pair tends to move very slowly, so I am not necessarily looking for a massive breakdown, just that I think we will continue the overall negative pressure. On the upside, you can make an argument for the 1.08 level being a massive resistance barrier, so I would short this market in that area as well.
I have no interest in buying the Euro, at least not anytime soon, unless of course, somebody changes the overall attitude coming out of the Federal Reserve. I think volatility and choppy behavior is something that you will have to expect, but longer-term we are still mostly in a downtrend, and I just do not see how that changes for the longer-term.
For a look at all of today’s economic events, check out our economic calendar.
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.