Rallies at this point will continue to show opportunities to short from what I can see, especially near the 200 day EMA above.
The euro pulled back ever so slightly during Good Friday, which featured a lot less volume as usual. The massive rally on Thursday was somewhat impressive, but you can make a serious argument that it was simply people closing out positions before going into the Easter weekend. With Friday being Good Friday and also being Non-Farm Payroll Friday, there were a lot of reasons to think that perhaps we would simply slump back and forth.
It is worth noting that the 200-day EMA is at the 1.1826 level, and an area that I think will continue to see a lot of resistance. We are in a downtrend and I think we are going to go looking towards the 1.16 level underneath, where I see a significant amount of support. That is a longer-term support level, so I think a certain amount of anticipation by sellers will be influential in this market. The 1.16 level has been massive support in the past, so I think it would make sense that it holds up somewhat on the way down.
Rallies at this point will continue to show opportunities to short from what I can see, especially near the 200 day EMA above. You can make an argument for the euro dropping during the next couple of weeks due to the continued lockdowns in the European Union, and the outperformance of the US economy. After all, the Americans added 916,000 jobs for the month of March, which suggests that we will continue to see rates rise in the US, driving the value of the greenback higher over the longer term.
I think the one thing you can probably count on is a lot of choppiness at this juncture. Therefore, you would have to keep your position size somewhat small, keeping an eye on the overall signs of exhaustion that we should get on rallies, but a break above that 200-day EMA could open up a move towards the 1.19 handle. At that juncture, we would then have to deal with the 50-day EMA which could cause resistance as well. I think we have further to go to the downside and have been trading as such. If we were to break down below the 1.16 handle, then it is likely that we will drop to the 1.15 level rather quickly.