The Euro has rallied a bit during the course of the trading session on Friday, but then gave back the gains to show a little less than desirable momentum. That being said, if we do close out like this, then it is very likely that the market could go lower, perhaps reaching towards the 1.1850 level underneath. If we were to break down below the 1.1850 level, then it is likely that the market could go looking towards the 1.1750 level. Breaking down below that level then opens up a flood of selling that could send this market down to the 1.16 level.
EUR/USD Video 02.08.21
If we turn around a break above the top of the shooting star and clear the 200 day EMA, then it is possible that the market could go looking towards the 1.20 handle. The 1.20 handle is of course an area that will attract a lot of headlines, and thereby cause the markets show signs of hesitation in that general vicinity. Ultimately, this is a market that I think continues to see a lot of choppy behavior but that is nothing new for this pair.
Pay close attention to the 10 year yields in America, because they do offer quite a bit more than Germany, so if the German bond market goes even more negative, it is possible that we may see the Euro get punished as a result. Furthermore, the PCE numbers came out less than expected during the trading session, so there is also the possibility that a bit of a “fear trade” could come back into this market.
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This article was originally posted on FX Empire