The euro continues to be noisy, but I still favor the downside more than anything else.
The euro gapped higher to kick off the trading session on Monday but then turned around to fill that gap rather quickly. By doing so, the market has shown just how fragile it is anything remotely close to bullish pressure. A lot of the buying at the open had to do with Emmanuel Macron winning the first round of the French presidential election and looking likely to be Marine Le Pen as well. That being said though, it more than likely will not change the overall trajectory of the euro.
The 1.08 level underneath is massive support, and I think that support is more or less a “zone” that extends down to the 1.05 level. That is an area that has been very noisy for quite some time, and I think it is only a matter of time before we have to test that area again. The price action during the day on Monday did very little during the day to suggest that the market was going to change anytime soon.
Keep in mind that the interest rate differential between the United States and Europe continues to favor the USA, so it should continue to favor the US dollar. I have no interest in trying to fight the overall trend, and with the 50-day EMA breaking through the 1.11 level, is very likely that we will continue to see momentum chasers push this market down.
This is a market that has been going lower for quite some time, so although this could in theory be a “double bottom”, the reality is that it would take a lot to change things. Ultimately, this market would have to show a complete reversal and fundamental conditions would have to back this up. I think a short-term rally from here will more than likely offer a selling opportunity, and I think we will continue to see that being the case.
Alternatively, the market could go back and forth between these two levels, as the euro is likely to be choppy as per usual. After all, that is the typical state of things in the euro, and I just do not see how that will change anytime soon. With this, the euro continues to be noisy, but I still favor the downside more than anything else.