Euro vs US Dollar Technical Analysis
The Euro initially tried to rally during the trading session on Tuesday, but struggled to keep gains yet again. It appears that the market is very cautious on holding onto gains, as the 1.06 level seems to be about as high as this market wants to hang about. The fact that we are between the two biggest holidays of the year of course is something to keep in your mind, but once we get into January we should get a little bit of clarity.
If we break down below the lows of last week, then I do believe that it’s probably a move down to the 1.05 level, maybe down to the 200-Day EMA. Anything below there then washes the Euro out completely. You could make an argument for channel, but you can also make an argument for rising wedge. At this point I think we are trying to figure out which way to go, but I certainly have noticed that if you are short-term trader, you’ve made decent money over the last two weeks fading every rally that’s occurred. It’s difficult to imagine a scenario where the Euro suddenly takes off during holiday trading, so I think that will continue to be the case.
If we did breakout above the 1.08 level, it would be very strong move, and the Euro could go look into the 1.10 level in that scenario. I don’t see that happening but it is something that you need to keep in the back your mind just in case. With that, I remain mildly bearish at the Euro right now.
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