- The EUR/USD has initially tried to rally during the day on Tuesday but has given back quite a bit of the gain, as the area above the 1.08 level is starting to show a lot of resistance.
- Because of this, it’s likely that we would see this area as potentially important, but we still have areas of support underneath, most specifically near the 1.07 level.
- As long as we stay above there, there’s no real reason to think that this market won’t be able to find buyers.
Will the area hold?
If it does not hold then that would obviously be a very negative turn of events. Alternatively, this would be a major change, and it could send the Euro falling rather rapidly. It’s a bit puzzling that people believe that the Euro should go higher, even though there are comments coming out of the ECB that they are going to stay tight with monetary policy and continue to raise interest rates, there are a lot of concerns about the economy itself. Furthermore, the Federal Reserve is likely to continue to see reasons to keep this type monetary policy, so if we start to see a little bit more of a “risk off” attitude around the world, that probably since the Euro lower.
The alternate scenario is that we break out the fresh, new highs, and then eventually go looking to the 1.10 level. I don’t really see in the short term that happening, but it is possible. We will have a couple of noisy days ahead of us as traders continue to put on positions after the holidays, and start to build up size. The market recently had seen the 50-Day EMA cross above the 200-Day EMA, so I would pay close attention to that as well because a lot of longer term “buy-and-hold” traders like that indicator. I have found it to be far too late to be useful, but I digress.
I think the only thing you can count on is a lot of choppy and back and forth behavior. Make sure you keep your position size reasonable, because these markets are very skittish to say the least.
Ready to trade our daily Forex analysis? We’ve made a list of the best Forex brokers worth trading with.
