- The Euro has initially dropped just a touch against the US dollar only to turn around and show signs of strength again.
- At this point, the Euro looks as if it is getting ready to break out and finally clear this 1.16 level.
- It’s at the 1.1650 level that I think we finally break free completely, which we are very close to at the moment.
And then I think we have a scenario where traders are just simply going to continue to push this higher. Given enough time, I do think that you have a situation where traders will assume that the US dollar must soften. This particular currency pair is a great one to watch because if the euro breaks higher against the US dollar, it is a little bit representative of the dollar index itself as it's the largest portion of it. And then you start to look for the US dollar to soften elsewhere. Rates in the United States did drop a bit during the trading session after initially spiking. So, this is part of what we're seeing.
Looking for Momentum
But given enough time, I think you have to look at this as a market that is simply looking for some type of momentum, some reason to get going. And if and when it gets it, it will probably accelerate quite rapidly. If we pull back the 1.15 level should be support. And after that, you have the 50 day EMA, which sits just above the 1.13 levels.
So ultimately, I think this is a situation where you are looking for some type of value or momentum that you can take advantage of to the upside. I’ve watched the US dollar try to fight back, but it looks like it's finally going to give up. And if that's the case, the nice thing, of course, is that it will allow traders to finally have at least some type of directionality with the market.
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