- The Euro initially tried to rally a bit during the trading session on Monday, but at this point we turned right back around to show signs of hesitation.
- I think this is a market that's trying to get to the bottom of the overall consolidation area, which I find closer to the 1.07 level.
The 1.07 level underneath is an area where we have seen a lot of action previously and, therefore I think it comes down to waiting for a buying opportunity to take advantage of. We're not there yet, but I do think that if we get some type of bounce, you can be on the other side of the trade and start buying as we rise again. I don't think that's a long term buy and hold signal. I just think that we're stuck in consolidation between 1.07 on the bottom and 1.10 on the top.
The Overall Outlook
In general, this is a market that I think is going to continue to struggle due to the fact that central banks around the world all look like they're going to cut rates. And with that being the case, there's no impotence to grab either one of these currency over the other. They both are going to see lower rates later. So with that being said, I think this is a market that continues to be very noisy, but if you are patient enough and wait for a buying opportunity closer to the big support level, you should do quite well. Conversely, if we were to break down below 1.07, then it opens up and moves down to 1.05, and more likely than not, you would see US dollar strength across the board against multiple other currencies, so that's something to keep an eye on.
One way that I will use this EUR/USD pair over time is to gauge overall USD strength or weakness. As a general rule, if this pair is rising, I assume that shorting the USD against other pairs might be the play. After all, this is like 60% of the US Dollar Index, and means that we will see this market dictate a lot of pressure.
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