- The EUR/USD fell during the trading session on Friday, only to turn around and show signs of strength as investors appeared willing to take a little risk off ahead of the weekend.
- The US dollar strengthened against multiple currencies, but the biggest mover of the day has been the selling of the Japanese yen.
- The euro looks likely to continue to see a lot of noise in general. The market appears to have become a little overdone, and a pullback is expected, although it may not be too deep.
The 50-Day EMA sits near the 1.08 level and is rising, providing dynamic support and making it a decent target for a pullback. The market has shown a tendency to continue finding buyers on dips, primarily due to the expectation that the European Central Bank will remain hawkish while the Federal Reserve will eventually slow down. This assumption is yet to be seen, but it's likely that we will continue to see a "buy in the dip" attitude in the short term.
Despite the noise in the market, there is a strong trend, so there will be volatility ahead. The situation is one of risk on/risk off, and if the market breaks higher, then it could become more of a "buy-and-hold" type of situation. It is important to be cautious about getting overly aggressive in such a noisy market.
The Market is Expected to See a Pullback
On the upside, there should be significant resistance near the 1.1250 level and then again at the 1.15 level, both of which are psychologically and structurally important levels. There will be more volatility going forward, as traders jump back and forth from the latest headlines.
Ultimately, the euro rallied during Friday's trading session, with the US dollar shrinking against multiple currencies. The market is expected to see a pullback, with the 50-Day EMA providing dynamic support near the 1.08 level. The short-term attitude is one of "buy on the dip," primarily due to the expectation that the European Central Bank will remain hawkish. Despite the noise, there is a strong trend, and caution is advised when trading in such a volatile market. Resistance is expected at the 1.1250 and 1.15 levels. Going forward, the Federal Reserve meeting could be a big deal on Wednesday, and it should be noted that May Day is this Monday.
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