Good morning traders.
Yesterday we saw our pair pushing further below our 1.13 level. Overnight it tested close to the 1.12 level before staging a limited rally back up to the 1.1250s.
In relative terms to the USD we could put together a strong argument that there is plenty of room below for the euro. We have monetary policy divergence, risk off sentiment (which favours USD flows), Italy debt concerns, political changes coming in Germany, lackluster eurozone economic data and Brexit. In such a scenario we could see the eurusd testing much further below current pricing.
However, I always have in mind that when the direction looks really obvious and everyone is on one side of the trade – there is often a good chance we get a move in the opposite direction.
I´m not saying get long but just bear in mind a sharp short covering rally could easily materialize. Just something to be mindful of.
The Daily Chart
Not much to add to what I said yesterday. We still have 1.12 on the cards and just below here, 1.1190 the 61.8 Fib level as a possible test. Below these levels we are looking at 1.11 and 1.10 until we get some structure to work with.
The Hourly Chart
There is still not much structure to trade with at the hourly level but we at least have a couple of levels created yesterday. There will be some liquidity at the 1.1270s level and minor resistance at the 1.1250s.
The direction of travel is still bearish and I´ll be looking to get short on any moves back up the chart – I´m watching the liquidity zone above the 1.1270s in particular.
Have a good one amigos.