This is a market that I think will be more noise than anything else, but I think a short-term dip may end up offer a buying opportunity underneath.
[CAD:EN - 2 - Trade EUR/USD great conditions]
The euro tried to rally a bit during the trading session on Wednesday but gave back the early gains to show a less-than-exciting candlestick. The market has rallied quite nicely over the last couple of days, so a little bit of a pullback should not be a huge surprise. When I look at the euro, I see it as range-bound between the 1.20 level and the 1.23 level above. Near the 1.20 level, there is a significant 100-point barrier underneath that should continue to keep the market somewhat levitated.
The 1.22 level above will offer some resistance, perhaps opening up the market to reach towards the 1.23 handle. However, the 1.23 level is the beginning of a 200-point range of resistance, and I think it is very likely that any move towards that level will probably turn right back around. For what it is worth, the 50-day EMA is starting to flatten out, so this suggests that we may not do a whole lot in the short term. Do not be surprised if we see some type of grind more than anything else, perhaps a bit of consolidation as we try to figure out what we are going to do next.
In general, I think a lot of this is focusing on the fact that the European Union is struggling so much to get the vaccinations out there, while the United States seems to be ready to go back to work much quicker. We will continue to hear a lot of noise, but at the same time, we also have the stimulus in the United States that looks to be so stringent and massive, and that could weigh upon the US dollar. In other words, this is a market that I think will be more noise than anything else, but I think a short-term dip may end up offer a buying opportunity underneath. However, if we were to break down below the 1.19 level, we could see this market fall apart. In the short term, I think this is probably more or less going to be a very tight range as we drift into the second half of the week. It is very likely that we will find ourselves in about a 200-point range.