- The euro initially did try to rally against the US dollar during the trading session on Tuesday, but we have seen quite a bit of selling pressure.
- Now it looks as if we are trying to reconfirm the idea of the shooting star from Monday’s showing the 1.14 level as being massive resistance.
- This is an area that’s been important multiple times over the last couple of weeks, so it’ll be interesting to see what happens now.
If we do break above that level, then the 1.15 level above is even more resistant, and would be very difficult to get above. If we do break above that level, then it’s likely that the euro will really start to take off to the upside and it would probably also bring in massive US dollar selling. It would not only sell off against the euro, but probably multiple other currencies as well.
Technical Analysis
The technical analysis for this EUR/USD pair is relatively noisy, because as of late, we have seen a lot of euro strength, but when you look at the longer-term charts, the area between 1.05 and 1.12 has been like a magnet for price for several years, and we had recently broken out of this range to the downside, only to rip through it again. Now we find ourselves in a situation where we are above that area to the upside and struggling, so the question now is whether or not the same behavior returns? This would mean that we would slice right back through the consolidation area as from a longer-term standpoint, what we are seeing is more volatility instead of any real conviction from what I can see.
There’s also a lot of fundamental questions out there about what’s going on, because quite frankly it could be a bit of “pull forward” transactions due to concerns about tariffs about to be leveled on the European Union whether or not that’s true remains to be seen, but this does look like a market that is starting to stall a bit.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.