It´s too early to re-short the EUR/USD
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EUR/USD bounced from the 123.6% after Draghi
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1.1250 is previous structure base
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$DXY holding at 97.30
After Mario Draghi said last week that the ECB expected rates to remain at record low levels at least through the end of 2019 the EUR flushed and traded below 1.1200 (123.6% retracement ) which confluenced with the bottom of the channel. Very technical levels and we expected a recovery from this Draghi induced move but we believe the pull back needs to be deeper becuase the EUR bears are not quite done with it.
The current pullback has stopped at the previous structure base around the 1.1250 level which is less than a 38.6% retracement from the last move down. Very shallow in my opinion and the only reason we are seeing this is because of very short term bullish momentum targets. Also the USD.
The $DXY is holding at the 97.30 level which has been tested numerous times since last friday´s NFPs. We believe that because of the ever decresing unemployment rate in the US we are going to see a bullish move on the USD ($DXY) at least to re test the highs at the 97.70 level. This move will make the EUR/USD break the 1.1250 level and squeeze this impatient shorts out.
We are looking at the 1.1320 level whcich is between the 50% and 61.8% retracement for a shot a a short on this pair. Until then we stay flat.
Author
Orlando Gutierrez
Learn 2 Trade
Orlando has been involved in the financial markets for about 10 years. His focus is Global Macro and he is a strong believer that the best way to trade the currency markets is focusing on the big picture and holding on to big macro trends.
