Article originally published on innerfx.com and republished here with permission
Politics is the art of preventing people from taking part in affairs which properly concern them. ~ Paul Valery
Good morning. The euro comes under a new round of selling pressure today as Friday’s rally was short-lived, therefore selling into strength is still the best bet. Some of the notable economic events this week are: Fed Interest Rate Decision tomorrow, ECB Draghi’s Speech and US Initial Jobless Claims on Thursday.
dollar is still consolidating above support at 78. More upside is likely in the near term as EURUSD declines towards recent lows.
The market reaction to last week’s EU Summit is negative and it seems there’s only a matter of time (read: days) until the euro will trade below recent bottom zone at 1.3150. Below 1.3150, next support is formed by the YTD’s low at 1.2870. Round numbers have a strong influence and many times they act like magnets. I think this time is not different, hence targeting 1.300 is the way to go and I wouldn’t consider long positions unless it will trade well above 1.35-1.36
Quite a bit of lack of direction we have here, as there are two candles suggesting the opposite. One way to play in such conditions is to set pending orders above and below last long tail candle/hammer – hence buying above 79 (continuation candle valid) / selling below 78 (fake reversal on Friday / whole move to 80.50 corrective)
Resistance layer between 1.0250 and 1.0300 is again under pressure as the greenback is recovering. I remain bullish on USDCAD, expecting a breakout in the next trading sessions.
Trendline support is under pressure and a breakdown would trigger more selling – next target being 100/70