- The euro initially tried to rally during the trading session but felt rather hard as it looks like the world came undone for a couple of hours there in the financial markets.
- It’s probably worth noting that most of this was kicked off due to weaker than anticipated US numbers, so I’m not exactly sure how that plays out here if I’m honest.
After all, the euro should strengthen against the US dollar if the US economy is starting to fall, but more importantly, the Canadian dollar should not be strengthening because quite frankly the Canadian economy is extraordinarily beholden to what’s going on in America. In other words, this is an exactly good for the Canadians either. This is what is so odd about this move, but maybe it was simply an opportunity to take a little bit of profit.
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Technical Analysis
The 1.4750 level is an area that previously had been resistant, and we are plunging toward that area. If “market memory” comes into the picture then we could see a little bit of a bounce from this area so it could set up for a nice buying opportunity, assuming that everybody pulls it together over the next couple of trading sessions. The 50-Day EMA sits just below the 1.4750 level and therefore it offers even more support going forward.
The size of the candlestick is rather telling, and quite frankly the market seemed like it was going to be positive throughout both the Asian and European session, but the Americans let the whole thing fall apart. With this being the case, I think that Monday is going to be extraordinarily difficult, but I think if we see a bit of a bounce between here and the 50-Day EMA, this could be a nice short-term trade to the upside, with perhaps an attempt to get back to the 1.4850 level above, an area that offered a bit of a ceiling in the past.
I am not necessarily looking for a big move one way or the other, but as we are at the bottom of what looks like a consolidation area, it makes a certain amount of sense that traders might come in and try to pick up “cheap euros.”
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