The euro rallied ever so slightly on Friday, as we continue to see a nice set up for day trading, but longer-term moves are still waiting for clarity.
EUR/USD
The euro rose slightly during the trading session on Friday but quite frankly this is a situation where we are just bouncing around in the same tight range. I get a lot of questions about the euro and sometimes there is not much to say other than we are just simply killing time. And that's what I think we're doing right now as we are sitting around the psychologically important 1.18 level and the 50-day EMA.
Furthermore, you need to keep in mind that the central bank’s outlook for both of these countries is a bit mixed. The ECB is expected to remain flat, so it doesn't do a whole lot for interest rate differential, but the Federal Reserve continues to see inflationary numbers jump into the picture and that has a major influence on the US dollar at least being somewhat stable. This is a scenario that continues to cause headaches for those looking for bigger moves.
Technical Barriers and Day Trading
All things being equal, the 1.1850 level above is a barrier that will be difficult to break, but if we do, I think that's very positive for the euro. On the other hand, if we break down below the 1.1760 level, that opens up a drop down to the 200-day EMA right around the 1.16 level.
Ultimately, this is a market that I think is still trying to figure out which direction to go and short-term traders are probably looking at this through the prism of 15-minute charts, maybe quick and sudden moves on the idea of day trading this range at least until we finally get something bigger to move the market.