Potential signal:
- I am a seller below 1.1175, with a target of 1.1050, and a stop at 1.1215 above.
- The euro continues to battle several factors at once, and of course, the Federal Reserve coming out with an announcement on Wednesday will be watched very closely.
EUR/USD
The euro fell during the trading session here on Monday, breaking below the 1.12 level again. But as we've seen over the last couple of trading sessions, buyers turn the market around to show signs of life. This is a market that continues to fail to hold gains, though, and I think that will continue to be one that favors the US dollar more than anything else at this point.
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Whether or not we can close below the 1.12 level would be an opening salvo, perhaps for even more selling pressure. The 1.1150 level could be the next target. Anything below there could open up even deeper losses.
All things being equal, I think the euro has to worry about the idea of whether or not energy is going to be abundant in Europe this winter or not. Natural gas markets look horrific over there, so that's worth watching.
Federal Reserve and statement
Also, keep an eye on the U.S. central bank, with the Federal Reserve sounding either dovish or hawkish after the interest-rate decision, which is expected to be unchanged. The statement could give us an idea as to where we are going next. If they sound hawkish, and with European weakness in general, especially with French debt still being an issue, that could send this market much lower.
Rallies at this point in time, I look at with suspicion until we break above the 50-day EMA, which is right at the 1.1350 level. I have no interest in buying the euro, at least not at the moment. This could be changed by Kevin Warsh statements, but we have to wait an see how that plays out.
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