The EUR/USD pair did very little during the session on Monday, as we continue to test the 1.06 level for support. Needless to say, we found support there, but at this point in time I don’t think that this market will suddenly change trends, and become a nice buying opportunity. In fact, the daily candle ended up forming a bit of a shooting star, so it’s probably only a matter time before we break down below the 1.06 handle and reach towards my longer-term target of 1.05 below.
At this point in time, I believe that it is only a matter of time before the sellers get involved, so rally should be selling opportunities as far as I can see. On top of that, I see resistance of the 1.07 level, the 1.08 level, and of course the 1.09 level. All things being equal, the uptrend line that I have marked on this chart should continue to keep this market in a downtrend as well, so it’s not until we get above there that I would even remotely think about buying this market.
Central Banks
Keep in mind that the European Central Bank has recently stated that they were ready to add more stimulus if needed, and that of course works against the value of the Euro in general. With that, we are more than likely going to continue to see bearish pressure going forward, especially when you consider that the Federal Reserve might be a situation where they have to start raising interest rates. This of course is more likely now that we have seen massive numbers coming out of the Nonfarm Payroll announcement, so having said that it makes sense we continue to struggle.
I don’t know if we can get below the 1.05 level, but that is a question that I’m sure the market will be asking fairly soon. By the end of the year I believe that we will see this market show quite a bit of volatility, and with that we could finally break down below there. Below there, things get really interesting as we should reach towards parity.
