- The Euro has shown itself to be rather resilient after initially pulling back against the US dollar on Monday.
- The market looks as if it is trying to get to the 1.18 level, an area that quite frankly has been like a brick wall for a lot of traders.
- And with that being the case, I think you have to be very concerned, I wouldn't necessarily try to buy into this until we break through there.
That being said, we could also get a bit of short-term pullback, which I think might be a nice opportunity as well. Keep in mind that we have been in a 200 pip range between 1.16 on the bottom and 1.18 on the top. The pullbacks will certainly look at the 50-day EMA at the 1.1643 level as potential support, right along with that 1.16 level. We do have an interest rate decision coming out of the Federal Reserve on Wednesday. And I think that ends up being a big factor as well. So do keep that in mind.
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Noise and Chop
With this being the case, I would anticipate that we see a lot of noise and chop and basically just generally miserable conditions, more short-term based than anything else. Once we get through this week, we might have a little bit more clarity. But as things stand right now, I think you've got a situation where traders are going to have to look at this through the prism of whether or not we can break out to the upside and sustain you continuing the “risk on” type of behavior.
Or if we have an environment where traders might start to worry about the global economy if the Federal Reserve blinks and shows signs of weakness. So, in the next couple of days, I think we will probably remain somewhat range-bound, but I also recognize by the end of the week, we might have a major shift one way or the other, so be very cautious.
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