It certainly looks as if the market continues to struggle with anything close to euro strength.
- The EUR/USD currency pair continues to go back and forth without any real direction or conviction one way or the other.
- By doing so, it is causing headaches for traders that are trying to get a feel for where we are going next.
- In order to understand where we are going next, you need to take a look at the longer-term trend, which is most decidedly down.
Long-Term Downward Momentum
While this does not guarantee that we break down from here, it does suggest that the overall momentum of the market is negative from a longer-term standpoint, and that is something that should not be forgotten. Because of this, we will have to pay close attention to the top of the consolidation box and we are presently trading and, with the 1.03 level above offering significant resistance. Underneath, the 1.01 level offers significant support, so it’s very likely that we continue to bang around in this general vicinity as we look for some type of decision.
If we break down, then the most obvious place to start looking for a decision would be near the parity level, which of course is an area that will attract a lot of attention. We had bounced from there previously, and now it looks like it will perhaps be a bit of a target going forward. I don’t necessarily believe that this is a situation where we break through it easily, but it certainly looks as if the market is willing to at least attempt it again.
With the jobs number coming out on Friday it’s possible that could be the reason we break down below there, but if we do turn around and rally, I would think that there should be plenty of sellers above that could get involved as well. Those sellers will more likely than not be found at the 1.03 level, as well as the 1.04 level where we had previously seen a bit of support. That brings “market memory” back into the picture, and of course, we have the 50-day EMA in that general vicinity as well, so it’s a bit of a “one-two punch” for this market. This doesn’t mean that things are going to be easy, but it certainly looks as if the market continues to struggle with anything close to euro strength. That in and of itself is something you should be paying attention to.