The Euro has been slightly positive during the trading session on Monday as we have respected the 1.20 handle as support. Furthermore, we also have the 50 day EMA underneath offering significant support, so I do think that it is only a matter of time before buyers would come in and try to pick this market up. In fact, we have seen the market rally 50 pips, so that of course is very bullish. With that being the case, it is likely that we will continue to try to grind towards the top of the Friday selloff. The selloff was relatively important, but it just shows signs of exhaustion. At this point in time, it is likely that we will continue to see the market try to go higher but it is obviously very erratic at this point.
EUR/USD Video 04.05.21
If we do break down below the 50 day EMA, that would be a very negative sign, probably opening up the Euro for a drop down to the 200 day EMA. All things been equal though, the market had gotten a bit over bought, so this pullback on Friday certainly made quite a bit of sense. Looking forward, the market looks more likely than not to go reaching towards the 1.2150 handle, perhaps even the 1.22 handle. In general, this comes down to the US dollar more than anything else as well, so that of course will have its influence. A little bit of Federal Reserve speak during the Friday session was a main culprit, so it was almost certainly overdone as the Federal Reserve is light years away from doing anything close to tapering monetary policy.
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