The EUR/USD pair spiked early during trading on Monday, slamming into the 1.1250 level and even managed to break above there early in the day. However, we have given back quite a bit of the gains and it looks as if we are trying to form a bit of a shooting star. This was perhaps in reaction to the US/China trade war escalating, but in the end traders preferred on US dollars as just about any type of safety instrument that you want to put your money into will require US dollars.
Yes, it is a little bit counterintuitive but at the end of the day the worse the trade war gets for the global economy, the better off you are going to be owning the US dollar. Treasuries got a massive bed, and that of course helps US dollar demand. As we have turned around it looks as if the 50 day EMA is holding as resistance as well, so it’s very likely that this will be thought of as a selling opportunity.
The 1.12 level will be targeted next, which of course will be somewhat supportive. That doesn’t mean that it’s going to hold, and quite frankly I don’t expect it to. I believe that we will probably start going back down to the 1.11 level underneath which has been massive support in the past. After that, then we go looking towards 1.10 level which is a major level on longer-term charts. I believe that the market will try to retest that area given enough time.
However, keep in mind that there is always an alternate scenario. If we can break above the top of the shooting star shaped candle that we are trying to form on Monday, then we could go as high as 1.1325 level, perhaps even the 1.14 level. However, at this point it certainly looks as if we are ready to roll over.
Yes, it is a little bit counterintuitive but at the end of the day the worse the trade war gets for the global economy, the better off you are going to be owning the US dollar. Treasuries got a massive bed, and that of course helps US dollar demand. As we have turned around it looks as if the 50 day EMA is holding as resistance as well, so it’s very likely that this will be thought of as a selling opportunity.
The 1.12 level will be targeted next, which of course will be somewhat supportive. That doesn’t mean that it’s going to hold, and quite frankly I don’t expect it to. I believe that we will probably start going back down to the 1.11 level underneath which has been massive support in the past. After that, then we go looking towards 1.10 level which is a major level on longer-term charts. I believe that the market will try to retest that area given enough time.
However, keep in mind that there is always an alternate scenario. If we can break above the top of the shooting star shaped candle that we are trying to form on Monday, then we could go as high as 1.1325 level, perhaps even the 1.14 level. However, at this point it certainly looks as if we are ready to roll over.