The Euro has really seen a bit of soft action over the last couple of days, as the ECB meeting will continue to be in the focus of traders, and the US dollar strengthening has also played a huge part.
EUR/USD
The Euro has really seen a lackluster performance over the last couple of days, and we are hanging around the 1.18 level as the area continues to at least try to support the Euro. If we break down below here things could get ugly. Furthermore, you have to keep in mind that the ECB has an interest rate decision on Thursday.
If we break down below the 50-day EMA I think we will go looking to the 1.16 level and the 200-day EMA. On the other hand, if we turn around and break above the 1.1875 level on the daily closure that opens up the possibility of a move to the 1.21 handle. This is a target that I think a lot of people are trying to reach. However, there are a lot of issues between here and there waiting to get into the open.
Support and Resistance Levels
The Euro had consolidated for quite some time and now we are testing the top of this region. If we fall from here, I suspect that we will see the Euro going back and forth overall. The 1.14 level is a huge support level and if we were to break down below there, we could really see the Euro fall apart. In that environment you would see the US Dollar increasing against almost everything else.
I think this is a choppy noisy pair for the day on Thursday. We will see where it ends but it is the daily close that I will be watching more than anything else due to the fact that the volatility probably just causes more headaches than anything else.