The euro is pulling back on Thursday, but will early shorts get burned?
Watch today’s video for key insights on what to watch when trading the EURUSD. Plus, get the key levels to watch on the DXY, including a confluence of support with huge implications.
EURUSD followed through this week following Friday’s NFP miss. We anticipated this rally, given Friday’s reclaim of 1.1450 and 1.1520. Additionally, the buy-side imbalances just above 1.1700 were likely to pull the euro higher this week.
However, the 1.1660-1.1680 resistance area discussed in this week’s videos is proving too significant for EURUSD bulls. Thursday’s session came close to tagging the 1.1706 imbalance, but fell short of reaching the level.
The same goes for the DXY, which took out its 97.93 imbalance we’ve discussed, but left the 97.74 single print intact. The second imbalance sits just above a confluence of support at 97.70.
While there’s no guarantee we see these markets hit their respective imbalances, there is a decent chance of it in the coming days. The invalidation for this idea is the 98.60 level on the DXY.
If the US dollar reclaims 98.60 on the high time frames, there’s less of a chance we see a full 97.70 retest. However, until then, 98.50/60 is key resistance for the DXY.
Similarly, the EURUSD invalidation is 1.1585. As long as the euro is above that level on the daily time frame, the 1.1706 and 1.1736 imbalances are open for business.
Of course, suppose the EURUSD and DXY invalidate the idea via the levels outlined above. In that case, we may have a euro top and dollar bottom sooner than anticipated.
