EUR/USD Daily Outlook- April 15, 2014

The EUR/USD pair fell during the session on Monday after initially gapping lower. Part of this would been predicated on the idea that members of the ECB suggesting that the value of the Euro may be a bit too high at the moment, and that more monetary policy is probably going to be necessary. In other words, quantitative easing could be coming to the European Union, and that should drive the value of the Euro even lower.

On the other side of the Atlantic, the Federal Reserve continues to taper off of quantitative easing. In other words, this market is far too overvalued at the moment. On top of that, there is a monthly downtrend line that has held up a couple of times. The 1.39 level is roughly where it slices through the chart now, and that’s exactly where we stalled after this last impulsive move higher. Because of this, I begin to wonder whether or not we’re going to continue lower.

Support below though.

Even though I see plenty of reasons for this market to fall, mainly the headlines and the downward pressure above, I believe that there is plenty of support below as well. The 1.38 level is one barrier to get through, but there’s a lot of noise all the way down to the 1.37 handle. It really isn’t until we get below the 1.37 level that we are “free and clear” to continue falling to the 1.35 handle.

With that in mind, I think that it is still very likely that we could bounce from here, but the Euro is certainly show signs of weakness. Nonetheless, I believe that this market will continue to be choppy, as it has been for some time. Even the last two moves that we’ve seen have been choppy during the process as well, so I don’t really think that were going to see anything different anytime soon. On the other hand though, if we did get above the 1.40 level some time, we could see this market become a “buy and hold” market.

EUR/USD Daily

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.