Euro vs US Dollar Technical Analysis
The euro has rallied a bit during the session here on Thursday, as the market has been in an oversold condition, so it does make a certain amount of sense that we would bounce from the crucial 1.05 level. The 1.05 level of course is a large, round, psychologically significant figure, in an area where we’ve seen some action in the past. By bouncing the way we have, it probably will set up a nice selling opportunity given enough time, especially as we have the GDP numbers coming out, and of course interest rates in America continue to be very strong, and they look like they are ready to continue ripping higher over the longer term. That being said, we have an oversold condition that the market is trying to work off.
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The so-called “death cross” that is getting ready to occur is a longer-term bearish signal, and I do think that a lot of traders will be paying close attention to it. This is when the 50-Day EMA crosses below the 200-Day EMA, setting off longer-term algorithms. That being said, the markets don’t go in one direction forever, so I do think that this rally is something that you need to pay attention to. I think it offers a nice selling opportunity on signs of exhaustion, and to be honest, it would not surprise me at all to see this market fall apart yet again, but people are more likely than not taking a bit of profit heading into these important economic announcements.
Currently, the euro would have to trade above the 1.07 level to convince me that something’s going on as far as a longer-term recovery. On the downside, if we get a daily close below the 1.05 level, that opens up a move down to the 1.0250 level, and then possibly even parity over the longer term. Keep in mind that this is more about the US dollar than anything else, so pay attention to interest rates in the United States as they are by far the biggest mover of markets at the moment.
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