The Euro initially rallied during the trading session Monday, but then pulled back a bit to show signs of weakness yet again. The market has recently broken through the 1.09 level to show further weakness, and it has simply been falling apart. Ultimately, this is a market that has broken apart as the European Union simply cannot get out of its own way. The European economy certainly is struggling against signs of recession, and of course it pales in comparison to the US economy. Furthermore, the market continues to look at a lot of divergence between the two central banks. This last couple of meetings have suggested that the Federal Reserve is at least data dependent, while it’s very likely that the European Central Bank continues to do what it can to loosen monetary policy.
EUR/USD Video 18.02.20
Ultimately, this is a pair that does need to bounce, because quite frankly markets can’t move in one direction forever. The market is oversold on just about any metric you measure, so waiting for a bounce is the prudent thing to do. This could take several days or even weeks for that matter. Selling closer to the 1.09 level makes quite a bit of sense, as selling down here is simply going to be “chasing the trade.” That being said, buying is extraordinarily dangerous and there is nothing in the fundamentals that suggest you should be doing so. With that in mind, take advantage of rallies that show signs of exhaustion to start picking up “cheap dollars” again.
This article was originally posted on FX Empire
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