- The Euro has rallied just a bit during the early hours here on Friday as we are dancing around the 50-day EMA, an indicator that has been reliable support.
- The uptrend line that sits just below there also gives traders reason to pause and perhaps hope that the Euro can bounce and we’re in an area that needs to do so.
- Otherwise, the Euro finds itself in serious trouble. A breakdown below the 1.16 level could open up quite a massive amount of selling.
But we’ve gotten through the core PCE numbers in the United States, and they came out as anticipated. So, it wasn’t like they were so hot that they threw the market into a tizzy again, like the GDP numbers did.
The Upside Target
A rally at this point in time could send the euro to the 1.18 level, which is a large round psychologically significant figure and an area that has shown quite a bit of resistance in the past. Ultimately, this is a market that I’m looking at very closely, and I do recognize a lot of this comes down to the noise around the Federal Reserve and what it is they are going to do with monetary policy.
Markets continue to see a lot of volatility and a lot of noise. But if we can break above the 1.19 level, the market could send this market up to the 1.20 level. If we break down below the 1.16 level, then I think we dropped to the 1.14 level, possibly even testing the 200 day EMA.
A move below changes the trend in pretty much everybody’s minds. So really at this point, I’m watching this market. We are at a point of inflection. It’s going to be interesting to see how this plays out.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
