- The euro rallied on Tuesday as traders speculated about a potential Federal Reserve shift, though concerns remain over weak U.S. retail sales and global demand.
- Key resistance and support levels continue to shape expectations for further movement.
The euro has rallied rather significantly during the trading session here on Tuesday, as it looks like everybody believes the Federal Reserve is suddenly going to capitulate. This, of course, is something that changes day to day, and I suspect it's probably only a matter of time before that happens again. We did get weaker-than-anticipated retail sales, but if the American consumer stops buying, no way doesn't influence the rest of the world.
So, any rally at this point in time, I would look at with great suspicion, with an eye on the 50-day EMA and the downtrend line, both offering resistance. Breaking above the 1.17 level would be a major victory for the Bulls, but we're still pretty far from there. So, I think you have to look at this as a situation where you are hoping to see a little bit of exhaustion that you can start fading.
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The 1.14 level underneath is a floor, if you will, and I think you've got to look at this 200-day EMA sitting just above there with a certain amount of attention as well. I think that could be an interesting place to be playing off of, but if we were to break down below the 1.14 level, it could send this market much lower. In that environment, then I think you see the euro drop to the 1.11 level.
If we can break above the 1.17 level, that is a bullish sign, but it's not bullish enough for me to be a buyer until we break above 1.18. At that point, though, I would anticipate that 1.18 level to be challenged.
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