- For me, the 1.1875 level tells me everything. If we break above there, then the Euro continues towards 1.20 and beyond.
EUR/USD
The Euro initially did try to rally against the US dollar on Monday, but as usual, we continue to see a lot of hesitation near the 1.18 level. As things stand right now, this is an area that I think is going to be difficult to get above, and that’s going to be particularly true this time of year, as liquidity will be a major issue. Most traders are simply going on about their holidays and are not bothered by trading currency.
But the question now is what happens in January? Can we break the elusive 1.1875 level? For me, that level tells me everything. If we break above there, then the Euro continues towards 1.20 and beyond. However, if we continue to see this area offer a bit of a brick wall, it’s very possible that we pull back towards the 50-day EMA.
The Economy isn't Collapsing
Other currencies are doing fairly well against the US dollar and the Euro; I think it will be a slow mover regardless because, quite frankly, Europe isn’t exactly setting the world on fire in terms of economic growth at the moment. There’s a huge consensus that the Federal Reserve is going to cut rates next year, and that does put pressure on the dollar.
But the overall economic data continues to be rather sticky in the United States, and it turns out that it’s not the end of the country. The economy isn’t collapsing, and quite frankly, the job market is still pretty healthy, and as long as that’s the case, there will be a significant amount of pressure on the Federal Reserve to keep rates at least a little bit higher. While job additions are not strong, job openings still are. With that being the case, as things stand right now, I assume we are still very much in a trend, and I will be watching that area between 1.18 and 1.1875 to see if it gives way to the buyers. If it doesn’t, then we probably pull back.
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