- The EUR/USD currency pair experienced an initial surge during the trading session on Friday, but gains were quickly reversed as the currency broke above the 50-Day EMA.
- The market appears to be settling into a trading range, which is understandable given the multitude of risks traders are currently grappling with.
- However, as soon as New York got its hands on the market without the Europeans or Asians involved, the “hopium” trade came back into vogue, and they sold the US dollar off.
1.06 Level in Focus
As the market fluctuates between the 50-Day exponential moving average above and the 200-Day EMA below, consolidation seems likely, as these two moving averages often attract significant attention. The 1.06 level appears to be emerging as a central point for trading activity, suggesting potential "reversion to the mean" setups.
Breaking above the top of Friday's candlestick could encounter resistance around the 1.0750 level, which may prove difficult to surpass. Traders should exercise caution with position sizing, as the market appears to be preparing for a larger move. A breakdown below the bottom of Wednesday's substantial candlestick could trigger a wave of selling, reinforcing the fear some market participants may be experiencing. While sellers seem to have a stronger argument, the market's actions may not always align with individual beliefs, emphasizing the importance of caution.
A downward move could see the market targeting the 1.03 level and possibly parity. On the upside, even if the market were to break above the 1.0750 level, substantial noise could create challenges. The market has previously sold off sharply from the 1.10 level, indicating that additional concerns could make traders nervous. In this context, the US dollar is likely to continue drawing attention. This will be especially true if we find the market looking for safety, as it will bring a lot of inflow into the US Treasury market. This has been the most recent of moves, so it is one that is at the forefront of most traders’ minds. Economic headwinds and banking issues certainly don’t lead to a lot of risk-taking, so I do think that the downward pressure probably continues over the longer term.
The Euro's gains during Friday's trading session were short-lived, with the market now settling into a trading range amidst various risk factors. As the market consolidates between the 50-Day and 200-Day EMAs, traders should remain cautious with position sizing and be prepared for potential larger moves. Key support and resistance levels to watch are 1.03 and 1.0750, with potential downside targets at parity and upside challenges above the 1.0750 level.
Ready to trade our daily Forex analysis? We’ve made a list of regulated forex brokers worth trading with.