The EUR/USD pair gapped lower at the open on Monday, turned around to test that level again, and then fell significantly. The 1.1230 level has offered support, so the question now is whether or not we can continue to find buyers underneath to drive the market to the upside longer term. We have quite a few things moving this week that could have an effect on this pair. Not the least of which of course is the ECB interest rate announcement during the session on Thursday. That being the case, the market could be a bit quiet between now and then, but I think that the overall trend to the upside should continue, unless of course the ECB says something very dovish specifically. Buying on dips is probably the best way to go going forward, and certainly is the way I would be looking at this market. I believe that the 1.12 level below should be massively supportive, and with that being the case a breakdown below there would be significant, but I don’t think it’s going to happen between now and Thursday.
We have been in longer-term consolidation for almost 3 years. The top of that is the 1.15 handle, and I believe that’s where the market is going to be going over the next several weeks. Because of this, I don’t have any interest in selling, and would be quite surprised if we break down below the 1.12 handle. However, with the massive amounts of geopolitical risk and of course volatility overall, anything would be possible. I still favor the upside, at least until we can reach towards the highs again of the consolidation where I would anticipate that the sellers will probably come back. Pay attention to inflation numbers on the United States, they of course will have an effect on this market as well.
Written by FX Empire