The EUR/USD fell during the session on Monday, as you can see on the chart attached. However, you can also see that the market bounced off of the 200 day exponential moving average as well. This is kind of ironic, considering the fact that the market has sliced through this moving avere quite often recently, that it would even bothered to acknowledge it.
The fact that the 200 day EMA is going sideways tells you exactly what the trend is in this pair: sideways. With that being the case, I am not very enthusiastic about trading this pair for anything more than a short-term trade. We do have a nice level card down at the moment, with 1.32 being the upper resistance, and the 1.30 level being the lower support. Until we get out of this area, it is going to be difficult to trade this pair for anything more than a short-term scalp.
Numerous headwinds out of Europe
There are so many possible headwinds coming out of Europe right now but it's almost impossible to trade in this environment. We have a situation where bad news can drop from that continent and any moment, but on the other side of the Atlantic Ocean we have a Federal Reserve that looks like it's willing to continue printing currency. In other words, if it weren't for the Federal Reserve this market would be closer to parity in my opinion.
Going forward, if we do manage to break above the 1.3250 area, I would be willing to start buying at that point as it would show a significant increase in momentum and a breakout of resistance. On the other hand, if we broke down below the 1.29 level I believe that it would show a continuation of the weakness that we saw early in the spring, and the market would more than likely target the 1.2750 area. However, I have the sneaking suspicion that we are trying to carve out this summer range right now, and as a result this market might be very quiet for some time.
