The Euro fell early on Monday, as the markets continued to see a lot of volatility. With this, the market is likely to remain noisy, but at the end of the day, we are also rangebound.
EUR/USD
The Euro initially fell a bit during the trading session here on Monday to crash towards the 1.15 level. The 1.15 level of course is an area that has been significant support. At this juncture, I think ultimately this is a market that is sitting right at the 200-day EMA.
After that, you have the 1.16 level offering resistance. If we were to break above there, then it opens up the possibility of a move to the 50-day EMA at the 1.1750 region. On the other hand, if we were to turn around and break down below the 1.15 level, then it could make this market much lower.
Keep in mind that this is all about the risk appetite around the world. If risk appetite starts to pick back up, that does help the Euro or maybe more specifically hurts the US dollar. With this being the case, I think you have got a situation where traders will continue to look at this through the prism of geopolitical headlines.
ECB Outlook and Oversold Conditions
The longer-term outlook for the European Central Bank is a bit murky at the moment because we do have to worry about the idea of whether or not the energy flow into the European Union will continue to strengthen. I do not necessarily think that is a very clear picture at the moment, but it certainly would favor the United States.
At this point, I think we are just bouncing from an oversold position. It will be interesting to see if we bounce a bit to show signs of exhaustion. The 1.18 level above I think is your absolute ceiling, but I do not even think we get there quite yet.
That being said, I think short term traders continue to run this pair probably with more of a downside bias on short term signs of exhaustion.