The Euro has been beaten up pretty significantly during the trading month of March, but as we close out the month we are still sitting above the crucial 1.12 level. That’s an area that has been rather supportive, and of course was the scene of a major break out to the upside quite some time ago. Market memory suggests that we may see a lot of choppiness.
The 1.12 level underneath is massive support, but at the same time the 1.15 level above is massive resistance. I think that the month of April will continue to see a lot of choppiness but I also suspect that we are very susceptible to a turnaround as the level has been so crucial. Granted, there has been a lot of resistance above and we have sold off but at this point it’s likely that the market only will grind back and forth, not necessarily some type of meltdown.
That being said, if we do break down to a fresh, new low, then we could drift towards the 1.11 level, and then possibly even the 1.10 level. That would probably coincide with some type of negative financial news globally, which of course is very possible. All things being equal though, it does appear that we are ready to go sideways for yet another month, as the European Central Bank has started to talk about staying loose for the foreseeable future, and of course the Federal Reserve is on the sidelines for at least the rest of 2019. Simply put, there is no interest rate differential of substance to worry about in this pair. In general, expect a lot of choppiness and noisy news, but I favor the upside over the next month, but I would also be very cautious about position sizing.
