The Euro initially tried to rally during the day on Friday, turned right back around to fall, only to find a lot of support underneath at which should be a major support region. Because of this, it’s very likely that we will find some value hunting in this area, as the Euro had recently broken out.
When you look at the daily chart, it doesn’t take a lot of imagination to see the massive “W pattern”, which of course is a reversal signal. The question now would be why is this market rallying? After all, the economic figures in the European Union aren’t exactly encouraging. Beyond that, the ECB has shown itself to be loose with their monetary policy, so it will be interesting to see whether or not the Euro can sustain strength. However, the biggest factor in this market right now is the Federal Reserve. They stepped away from a hawkish stance, so now the market needs to reprice the value of the US dollar.
With that in mind it looks as if the 50 day EMA underneath is going to offer support, as it is starting to turn higher. I believe that there is support that extends all the way down to the 1.12 handle, just as there is resistance above at the 1.1450 level. It is the summertime in this pair tends to be very choppy and slow to begin with, so you are going to need to be very patient with this move higher, but it does look as if we are trying to reach to the upside.
If this pair doesn’t move quick enough, you can use it as a proxy for US dollar strength, and trade against your favorite currencies that might offer a little bit more in the way of volatility or momentum.
When you look at the daily chart, it doesn’t take a lot of imagination to see the massive “W pattern”, which of course is a reversal signal. The question now would be why is this market rallying? After all, the economic figures in the European Union aren’t exactly encouraging. Beyond that, the ECB has shown itself to be loose with their monetary policy, so it will be interesting to see whether or not the Euro can sustain strength. However, the biggest factor in this market right now is the Federal Reserve. They stepped away from a hawkish stance, so now the market needs to reprice the value of the US dollar.
With that in mind it looks as if the 50 day EMA underneath is going to offer support, as it is starting to turn higher. I believe that there is support that extends all the way down to the 1.12 handle, just as there is resistance above at the 1.1450 level. It is the summertime in this pair tends to be very choppy and slow to begin with, so you are going to need to be very patient with this move higher, but it does look as if we are trying to reach to the upside.
If this pair doesn’t move quick enough, you can use it as a proxy for US dollar strength, and trade against your favorite currencies that might offer a little bit more in the way of volatility or momentum.