- You can see that the Euro has stabilized a bit during the trading session on Friday as we continue to pay close attention to the 1.04 level.
- Donald Trump’s announcement of tariffs on the European Union has had a greater impact on traders than I initially expected.
- Given that he had previously mentioned the possibility of such tariffs, I’m somewhat surprised by the market’s reaction.
Nonetheless, the market is now below the 50-day EMA, and that will attract a certain amount of attention in and of itself, and I think really what matters here is that we now find ourselves somewhat affirming the previous consolidation area, at least in theory we are of 1.05 above being a major barrier and 1.02 underneath being a major floor. As long as we stay in this area, I think we will continue to see a lot of noisy and erratic trading. That’s typical for the Euro. All one has to do is zoom out, look at the chart, and you can see a lot of it’s just chopping back and forth.
Rangebound Still
This range that we find ourselves in now is just below the one before it. And that is common for the euro as well. It finds a range, it stays there for a certain amount of time, and then it moves to the next block. With that being the case, I think you have to assume that there is still a lot of selling pressure above the 1.05 level. Just as there’s a lot of support at the 1.02 level, a lot of pundits had the euro go into parity before it’s all said and done. It wouldn’t really surprise me if that happened.
As far as getting bullish, I would need to see this market actually break above the 1.06 level because it would take out a cluster from December that could cause a bit of headaches for buyers. And of course, take out the crucial 200 day EMA. Ultimately though, I think we’ve got a lot more sideways action in front of us than anything else.
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