Euro Stabilizes a Bit After Plunge

The Euro went back and forth during the course of the trading session on Friday, showing signs of stability after we have seen such a massive plunge over the last couple of sessions. At this point, it could give us an opportunity to start shorting on signs of exhaustion after short-term rallies. Any rally at this point in time will have to deal with resistance at multiple points, but I think the most obvious level is going to be the 1.12 region.

EUR/USD Video 31.01.22

If the market were to continue breaking down, then the most obvious target would be the 1.10 level, an area that is a large, round, psychologically significant figure, and as a result it is possible that we could see a certain amount of psychological support and profit-taking in that general vicinity. Furthermore, a lot of demand for the US dollar will continue to be the case, as we have seen so much in the way of inflationary concerns, meaning that it will take more of those dollars to buy commodities and other goods around the world.

When we look at the chart, we can see there has been a significant drop, so at the very least I think it is probably likely that we will see some type of relief rally in the short term. That being said, at the first signs of exhaustion I will not hesitate whatsoever to start shorting again. The US dollar has been strengthening against most currencies, so it is not a huge surprise to see that it will strengthen against the Euro. At this point, the 50 day EMA needs to be broken to the upside in order to see a troop buying opportunity.

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