Euro pressing against dangerous levels

Alan Penny

23 April 2019

3 min read


The Euro continues to fall against the US dollar, reaching towards the vital 1.12 level. This is an area that will attract a lot of attention, because quite frankly it has been resilient in its support for some time. However, you can clearly see that the selling pressure continues. It isn’t necessarily a set line in the sand so to speak, it’s more or less going to be a supportive “region.”

The 1.12 level

The 1.12 level has been important more than once, and as a result we have seen buyers come in and pick this market up again and again. However, the last few days have been a bit rougher than usual, with the Tuesday session seen a lot of heavy volume to the downside, or at least as heavy as one can tell in the Forex markets. This doesn’t necessarily mean that we are breaking down, but what it does point out is that we are at a precarious level, and therefore we could see a bigger move to the downside.

Breaking down from here should send this market to the 1.10 level underneath, which is much more important from a longer-term standpoint. However, that doesn’t mean that it’s going to be very easy to do so, but at this point it’s obvious that the buyers simply can’t pick these markets up for any significant amount of time. The 1.1350 level is significant resistance so it’s not until we break above there that the buyers may have flex their muscles enough to convince longer-term traders.

eur/usd weekly chart

EUR/USD Weekly

US dollar strength

The US dollar has been strong against most things out there, and what’s crucial about paying attention to the Euro is that is the biggest financial market in the world. Quite frankly, the US dollar strengthens against the Euro, that means it’s probably going to strengthen against most other markets. So even if you aren’t watching this set up for a potential buying opportunity, what it does give you a “heads up” on is whether or not you may want to sell gold, the British pound, the stock market, etc.

This is why a lot of times you’ll hear professional traders refer to dollar levels in Euros, as it’s the most important market. It might be one of the more boring markets to trade, but it is most certainly one of the crucial ones. Having said all of that, if we break above the 1.1350 level it could send Gold higher, silver higher, stock markets higher, etc.

The main take away

The main take away from this is that the US dollar is flexing its muscles and eventually could be a problem for a lot of other assets. In this case, a break down below the 1.1150 level probably not only offers a selling opportunity in this market, but it might offer a selling opportunity and several others. We are at the precipice and I think at this point it’s very likely that some type of resolution should be coming soon. At this point, things don’t look good for a lot of risk assets.

Written By
Alan Penny

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