The Euro broke above the 1.2250 area to show signs of strength again, but it is worth noting that the 1.23 level above is going to offer a significant amount of resistance. That is an area that I think it is going to take a little bit of effort to finally get above there, so with that being the case it is likely that we will see a little bit of a pullback. This would be the typical type of break out play, meaning that short-term pullback should offer value, but it is worth noting that perhaps we may be a little bit stretched over the last couple of months, as you can see the angle of attack has gotten a little bit steep.

EUR/USD Video 26.05.21

To the downside, the 50 day EMA should be supportive, and perhaps a move below there could open up the possibility of a move towards the 1.20 handle. The 1.20 handle is of course a very large, round, psychologically significant figure. That should attract a certain amount of attention anyway, so with that being the case it is likely that we will find plenty of value hunters down in that region, especially as the US dollar continues to struggle longer term.

On the other hand, if we break above the 1.23 level, then it is likely that the market goes looking towards the 1.25 handle. With that being the case, the market is likely to see more of a significant move if we do break above there, because it should open up fresh buying and confidence in this market.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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