The euro rallied quite nicely during the Tuesday session after forming a hammer on Monday. So that's not a huge surprise to see this play out as we are so oversold. That being said, the 1.03 level is an area that could cause some issues. And I do believe that the 1.04 and the 1.04 50 level both could cause issues as well.
Part of this is in reaction to the PPI numbers coming out cooler than anticipated in America, but CPI comes out on Wednesday. And if that comes out hotter than expected, it will squash this like a bug. Furthermore, I think that we are still light years away from the Federal Reserve loosening monetary policy. So, this is at best a relief rally. I'd be looking to short somewhere near 1.04 if I get that opportunity. We may not, we'll just have to see how it plays out. Either way, I have no interest in buying the Euro. I don't see this as the bottom. And I still think that we are going to find parity before it is all said and done.
Did You Catch the Bottom? Unlikely.
The market, of course, bouncing the way it has, probably has some retail traders excited that they've caught the bottom. And while I guess that's possible, I can tell you from experience, this is how you get hurt trying to pick the bottom of a massive move like this. It doesn't mean that it can't happen but to think that you're going to hang on to the Euro until it goes back to the 1.12 level above is delusional. So with this being said, I find it easier to simply follow the trend.Even though the last two days have been rather strong for the Euro, with its recovery on Monday and its subsequent momentum on Tuesday, the trend is still very much a negative one and I just don't see that changing unless CPI comes out negative or something crazy like that.
