- You can see that the Euro initially pulled back a bit against the US dollar but turned around to show signs of life again.
- By doing so, this shows that perhaps we have the ability to get back to the 1.15 level.
- The area looks like a range just waiting to form between the 1.12 level and the 1.15 level, as the market is trying to digest some of those massive gains from the past.
I do believe that the market's overbought, so sideways action makes more sense than not, and it's also likely to be a scenario where things are very noisy, and the latest Twitter spat might cause a move, at least with certain players such as President Donald Trump.
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If the EUR/USD pair were to break down below the 1.12 level, then it's likely that we could drop down to the 50 day EMA right around the 1.0965 level. On the other hand, if we were to break above the 1.16 level, then it's possible that the market could go to the 1.23 level, an area on the longer term charts that matter.
As things stand right now, it looks more or less like a buy on the dip type of situation, but ultimately, we are more likely than not going to see a lot of sideways action, at least in the meantime, until we get a better read on where the global economy is going, central banks, obviously, and of course, what the trade tariff situation ends up being. I don’t think this is an easy trade in either direction, but you have to think that this does suggest that we have a lot of noise in the process to find a new trend in general.
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