The Euro initially pulled back during the trading session on Tuesday but then gained again to reach towards the 1.1375 level, which is roughly the top of the last couple of days. As we pulled back from there, it shows that there is a massive amount of selling pressure in this general vicinity. We may or may not be able to break out of it, but the biggest problem for the bulls in this market is that there is a massive amount of resistance between the 1.14 and the 1.15 level as well. Because of this, I anticipate that we will eventually see exhaustion overcome, and quite frankly all we need is some type of bad news involving Europe to make that a reality.
EUR/USD Video 15.07.20
The European economy is opening up a little quicker than the US, but at the end of the day if it truly becomes a “risk off environment”, that will bring out greenback buyers due to the fact that the US Treasury market will get a substantial bid. If the US Treasury market does start to rally, foreigners will need to buy US dollars in order to make those purchases, thereby causing a bit of a “knock on effect.” With that, I would anticipate that we could return to the 1.12 level rather quickly, as it is the bottom of the recent consolidation. Even if we get a move above the 1.14 level, it is still difficult to get overly bullish until we break above the 1.15 handle. At that point, then you are talking about a major trend change that could last for quite some time.
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This article was originally posted on FX Empire
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