Despite EURUSD being severely depressed and currently coming off key support, I still see a lot of talk about the pair going to parity.
Could it happen? Absolutely. But knowing something is possible doesn’t translate into profits. What makes a trader profitable is his or her ability to time entries in a way that effectively minimizes risk and maximizes profit.
It can often be difficult to differentiate between what the market is telling us and what our mind wants to see. This is especially true when evaluating the possibility of a 1,000 pip decline, which would be the case in order for the Euro to see parity against the US dollar.
But I see no reason to think that EURUSD is going to sell-off any time soon. I do like the pair lower over the medium to long-term, but the short-term scenario appears to be one of further consolidation if not gains, albeit small compared to other stronger currencies.
As mentioned in the weekend commentary, the 1.0850 level is currently providing support and will likely give sellers a hard time. In addition, the pair recently came into channel support that extends off of the April lows.
While I am by no means bullish, I’m also not in a hurry to sell the Euro against the USD. The depressed nature of the pair, potential for increased volatility and key support just below current levels make EURUSD (in my opinion) one of the least favorable markets to trade at the moment.
Summary: In a holding pattern until the pair can manage a daily close above the 1.1050 handle or below channel support and horizontal support at 1.0850.