The Euro has rallied a bit to kick off the trading session on Thursday but continues to see resistance above. That being the case, the market looks as if it is going to be susceptible to selling pressure yet again, as we have been in a downtrend for several months. That being said, there are a lot of questions out there about where the US dollar goes next, and of course interest rates in America will have a huge influence on where we end up.
EUR/USD Video 09.04.21
At the same time though, most retail traders have not been paying attention to the fact that the ECB has jumped into the bond market and started buying hand over fist. That drives down rates in the European Union, so it still favors the greenback from a yield standpoint. Because of this, I would not be surprised at all to see this market reached down towards the 1.16 level again, and therefore I am looking for selling opportunities. The 1.16 level has been massive support in the past and should be in the future. I believe there is roughly a 100 point zone of support between the 1.16 level at the 1.15 level, so I think of this more or less as the “floor the market.”
If we were to break down below the 1.15 handle, it is hard to tell where this would end up, but it certainly would be several handles below. In the short term, I think it makes quite a bit of sense that we get this pullback, and then perhaps grind back and forth. If we were to break above the 50 day EMA, then I think the market is probably going to go chasing the 1.20 level above.
For a look at all of today’s economic events, check out our economic calendar.