The Euro has shot higher during the trading session on Thursday but also gave back quite a bit of the gains as we have seen significant exhaustion in the Euro every time it rallies. I also see that there is a massive amount of resistance at the 1.14 handle, which extends all the way to the 1.15 handle. With that in mind I do believe that fading this market still works, perhaps opening up a pullback towards the 1.12 level. If we can break down below that level significantly, we will then go looking towards the 1.10 level underneath. That is an area that will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, and an area that has been previous resistance.
EUR/USD Video 10.07.20
Overall, I think that the Euro is benefiting from the Federal Reserve flooding the markets with US dollars, but that is probably the main reason for strength here. I do read where pandemic relief plans in the European Union should boost the Euro, but quite frankly it will just flood the market with those very same Euros. If that is going to be the case, I do not see how that is going to be bullish, but quite frankly I think we do not have a major uptrend until we can break above the 1.15 handle. If we do, then it becomes more of a “buy-and-hold” scenario but I do not see that happening in the short term so I would not hold my breath for that move. Ultimately, I believe that we are still essentially in a trading range.
For a look at all of today’s economic events, check out our economic calendar.