The Euro broke higher during the trading session on Thursday as we continue to see the Euro gain from the idea of Germany backstopping the entire Union. After all, we are issuing joint liability bonds in the EU now, something that people believe is a long-term positive for the stability of the region itself. After all, the biggest problem that a lot of people had with the EU is the fact that it was not necessarily a federalize union.
That being said, the market looks highly likely to continue to see buyers jump in, as we are now above the 200 day EMA. That is a technical signal that a lot of people pay attention to, but do not be surprised at all to see this act very choppy, because quite frankly the pair does that. If we are in fact seeing a trend change, that is an extraordinarily slow and painful process most of the time, and as a result you have to be overly cautious about jumping “all in” even if it is a true trend change. After all, we have just seen a massive spike towards the 1.15 level before plunging back down to the 1.06 level. In other words, this is a market that continues to be extraordinarily difficult.
Looking at this chart, it is probably going to be an excellent indicator for trading the Euro against other currencies, not necessarily against the US dollar. In fact, the pair is almost untradable at times, but what I will do is use this to give me directionality in other currency pair such as the EUR/CAD pair, the EUR/JPY pair, etc. Ultimately, this is a market that I think we will eventually see a larger move, and clearly of the move on Thursday was a shot across the bow as far as the potential direction, but we have seen this before and therefore you cannot trust the EUR/USD pair for too long. That being said, if we do see a trend change, it is a slow process so we should have plenty of time to get involved. You do not necessarily need to be the first person on the trade, it just simply need to let the other people push it, and then follow them. Right now, I am basically sitting on the sidelines when it comes to this pair but looking at a potential trade in other pairs involving the Euro as stated before.