Moving down to the , the single currency was unable to challenge the resistance etched from the low 1.0711, before turning south yesterday. This has placed the EUR nearby a neighboring support penciled in at 1.1142, which boasts strong historical significance noted all the way back to early 2015!
Looking over to the H4 timeframe, the recent selloff saw the market surpass the 1.12 handle going into yesterday’s London close, which left price free to test demand at 1.1161-1.1189. We find this demand appealing due to the robust momentum seen from the base. However, buying from here is risky for several reasons. Firstly, the 1.12 handle could be a potentially troublesome resistance barrier to overcome. Secondly, not only do we have the H4 mid-level support at 1.1150 plotted a few pips below; we also have the said daily support lurking just below that. In addition to this, let’s remember where weekly price is trading FROM (see above)!
Our suggestions: From our perspective, we do not see a lot to hang our hat on at the moment. Entering long is not really something we would advise for reasons stated above. And playing this market short, knowing that we’re trading within H4 demand that sits above a daily support, is also just as risky we believe.
Therefore, we feel remaining on the sidelines may very well be the better path to take for the moment.
Data points to consider: ECB President Draghi speaks at 1.45pm. FOMC meeting minutes at 7pm, FOMC member Kaplan speaks at 11pm GMT+1.