The Euro rallied a bit during the course of the trading session on Thursday to reach towards the 1.1850 level. That being said, the market is testing an area that previously had been support, so I would anticipate that there should be a bit of exhaustion and resistance coming, so I am looking for a selling opportunity. This is not to say that I have that set up quite yet, but when you look at the overall trend, you can see that the “H pattern” is still very much in play, and therefore it is likely that we will continue to see selling pressure sooner or later. Furthermore, yields in America are dropping, which means that people are throwing money at the bond market again.

EUR/USD Video 09.07.21

In order to buy those bonds, you need US dollars. That being said, we also need to pay attention to German Bunds, and other bond markets on the continent. Furthermore, the market might have been just a little bit oversold, so it is not a huge surprise to see a little bit of a bounce. That being said, I think it is only a matter of time before we continue the downtrend, because that move was so drastic and of course we are seeing a general “run towards safety” around the world, meaning that sooner or later it will show itself here as well.

To the upside, it is not until we break above the 200 day EMA that I start to have thoughts about going long, and quite frankly I think the US dollar is extraordinarily close to breaking out in general, so I think we are going to see a lot of the same behavior across multiple pairs.

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This article was originally posted on FX Empire


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