- During the trading session on Friday, we saw the euro pull back from the crucial 1.05 level, an area that’s been important multiple times, and it makes a certain amount of sense that we would see this action that has occurred for the session.
- That being said, the 50 Day EMA underneath should offer a little bit of support, and if we were to break down below there, then it’s likely that the euro could really start to pull apart.
- After all, we are at the top of the overall consolidation area that we had been in for some time, with the 1.05 level on the top, and the 1.02 level at the bottom.
Risk Appetite
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Risk appetite of markets in general will have a certain amount of influence on this market as the US dollar is considered to be a “safety currency”, while the euro of course is slightly more on the upper part of the risk spectrum. That being said, you should also keep in mind that the interest rate differential between the 2 economies will continue to be a major influence, especially with the European Central Bank cutting rates, while the Federal Reserve has to sit on the sidelines and determine whether or not inflation has shrank enough for them to start tightening monetary policy. As things stand right now, it doesn’t look like that’s the case, so I think you’ve got a situation where it’s only a matter of time before the euro falls again.
That being said, if we were to break higher from here, it’s not until we get above the 1.06 level that I would be convinced of a trend change, as there is a huge block of selling pressure between the 1.05 level in the 1.06 level. Furthermore, you also have the 200 Day EMA hanging around that area, so that’s another technical reason to think that it might be a bit of a ceiling.
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