- The euro has been absolutely hammered during the trading session on Monday as the trade deal between the Americans and the Europeans was announced.
- The market is looking at the 1.18 level as a major resistance barrier.
- So, I do think it's worth paying close attention to how we act in that area. And so far, it just looks to be like a brick wall.
- So, with that, I think you've got a scenario where we are testing the 1.16 level, which extends down to the 1.15 level as resistance.
Furthermore, it’s probably worth noting that this is a market that has the 50 day EMA in the middle and that has offered a bit of a trend line. But I also recognize that you have a scenario where a lot of traders are going to be asking questions of where do we go from here? After all the trade situation between the Americans and the Europeans are, you know, it's at least going to get better.
Trade Deal Bad for EU? Maybe.
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But the reality is that it may not be better for Europe and that might be what we're seeing. I also recognize that there's a very real world now where you look at this through the prism of there’s more certainty with the American economy. And some of that selling due to tariffs suggests that perhaps the market can now focus on where things are actually going instead of all the fear. We have formed a bit of a double top, but it's not until we break down below the 1.15 level that I would be looking too short. And when that happens, I have no qualms with doing it.
When you look at the longer term chart, there's a double top that we are testing the bottom from about four years ago. And this pair does tend to be very choppy over the longer term anyway. So to give back quite a bit of this rally to this point would not be a surprise.
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