The Euro continues to see a lot of hesitation at the moment, as the US dollar remains stubborn.
EUR/USD
Somewhat choppy and noisy during early trading on Tuesday, but quite frankly, we are in a situation where the 1.19 level continues to be a little bit of short-term resistance. We rallied quite nicely on Monday, and on Tuesday it looks like we just aren’t ready to continue the upward momentum.
If we do pull back from here, and it certainly looks like we very well could, the 1.18 level underneath is a significant support level. The 1.18 level is a large round psychologically significant figure that has meant something a couple of times in the past and therefore I think that’s your short-term floor.
Central Bank Influence and Technical Targets
The 50-day EMA sits underneath there as well, so I think this is a situation where we are still very much buy on the dip, but I also think that it is probably a market that remains very choppy as the European Central Bank continues to be very flatline and the Federal Reserve in theory at least will be cutting a couple of times this year.
I think we have a situation where traders will be waiting for the latest economic announcements coming out of the United States to determine if rate cuts are coming soon or whether or not they are coming much later in the year. If we were to break down below the 50-day EMA, I think you have a real shot at the Euro dropping down to the 200-day EMA.
On the other hand, if we break out to the upside, the 1.20 level could be your initial target, and if we can really start to pick up momentum, the 1.23 level could be the longer-term target if the Euro does in fact remain bullish. The measured move of the consolidation that we had broken out of previously should suggest 1.23 as well, so I think there is a real argument to be made for that, but it could be something that takes weeks or maybe even months as this pair just bounces around.
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