• The Euro fell against the US dollar during the trading session on Tuesday as we continue to see a lot of noisy behavior.

• All things being equal, this is a market where the traders are watching the 1.18 level as significant resistance that extends to the 1.1850 level.

  

This is an area that continues to be a very difficult barrier to overcome and with the interest rates in America spiking I just don’t see that happening easily. That being said, market participants continue to see a lot of questions asked about the situation in the Middle East and of course as we are getting different versions of different stories out of the leaders.

All things being equal, this is a market that I think continues to be very noisy and a bounce from here makes a certain amount of sense considering that we have the jobs report coming at the end of the day in the United States which will obviously have a major influence on what happens next.

Potential Breakdowns and Resistance Levels

If we were to break down below the 1.1680 level, then I think you have a situation where the Euro really starts to fall apart. Ultimately, I believe that the market participants continue to be very cognizant of the fact that at any moment we could see a random headline that just obliterates the atmosphere of the market as well as the risk appetite.

Ultimately, I am cautious, but I recognize that we have to believe this is a market that continues to be one that will be waiting to see whether or not the market will get good risk or if it will get bad risk appetite. Ultimately this is a market that I think you need to be very cautious with but do keep in mind that it is probably only a matter of time before we will have to make a deeper decision.

Once we break above the 1.1850 level then we can see the EUR/USD market truly jump. If we were to break down below the 50-day EMA then it’s possible that we could drop down to the 200-day EMA, maybe even all the way down to the 1.14 level.

The Euro continues to worry about the possibility that traders will have to be careful with the idea that if energy is not going to be finding its way to Europe that obviously is very negative. This is why I believe the US dollar will continue to be favored as long as there are tensions in the Middle East despite the fact that we are closer to the top of the range.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire