EUR/USD Falls During Tuesday Trading January 7, 2015
The EUR/USD pair dropped during the session on Tuesday, as we have broken below the 1.19 level. Though, there is an important amount of support all the approach down to the 1.18 handle in my view, and I think that we are basically in a 200 pips wide support zone.
In other words, it is not until we find below the 1.18 level that I am comfy selling this pair, and that is basically because of the way the monthly chart looks. There is clearly a major band of support in this general vicinity, and support on monthly charts need to be paid consideration to in order to avoid losing huge amounts of money in the Forex markets. Indeed, we are getting close to a stage that I think could be the end of the downtrend is things line up pretty right.
The market has been selling off the Euro like it is going to extremely implode. That is being said, I assume that the very least we want to see some kind of bounce from this are. After all, there cannot be that many people left to sell this pair right now and while I do believe that the US dollar continues to be one of the privileged currencies in the Forex markets. I just assume that the Euro has been sold way too viciously.
Unless the European Union is about to fall down, I think the currency has been beaten up far too stringently. Still, if we do break below the 1.18 level, watch below! At that level time I think we go as low as 1.10, a level that I did not believe I would ever see again. Nevertheless, I think it can to take something unusual break down below there, and that would more than likely be a combination of a very hawkish FOMC meeting minutes release, which of course comes out today, and a stronger than expected jobs number on Friday. Unless we get both of those, my outlook is that we are about to observe a bounce.