The Euro has broken down a bit during the course of the week but has also recovered to try to hang on to the 1.1850 level. All things being equal, the market looks as if it is trying to figure out what to do next, and quite frankly a lot of this probably comes down to the 10 year note. If the 10 year yield drops below 1.25% in the United States, that could really start to put this pair on its back foot. Furthermore, there is the concern that the Delta variant could cause some issues when it comes to the coronavirus, so it has been a relatively sour mood in the market.
EUR/USD Video 12.07.21
Even though we have formed a very supportive looking candlestick, it is worth noting that the lows of the last three weeks have been lower. It is because of this that I think we may see stabilization more than anything else. In fact, I have no interest in trying to buy this market until we break above the 1.20 handle, because I see between here and there is a massive and messy area of Norway’s that will make a longer-term trading almost impossible.
That being said, you can also make an argument that we are in fact trying to form some type of symmetrical triangle. With that being the case, it shows just how confused the market is at the moment, so I think it all kind of plays together quite nicely that we see a less than convincing move in this market. With that in mind, I think you have to play this more or less from shorter-term time frame at this point. It is worth noting that the most impulsive candlestick of the last several months was to the downside, so that is most certainly something worth paying attention to.
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This article was originally posted on FX Empire
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