Once we get past New Years, the Euro will likely continue to move higher.
The Euro retreated slightly in Friday’s trading session, but it looks like we are just trying to get high and consolidate after a massive surge to the upside. The 1.2250 level would be a significant resistance area, extending to the 1.23 level. After that, we could go to the 1.25 level, and you could probably argue that we’re too extended. However, as we have managed to fight any significant pullbacks, this could be a sign that the euro will simply consolidate and pull aside in order to digest recent gains.
Underneath there is a significant bullish flag that has broken out which has not yet been fully filled. In addition, the 1.22 level will also be favorable, as we have already seen during the trading session. There are many reasons to believe that the euro should continue to rise against the dollar, but much of it comes down to stimulus measures and the use of the media by government officials to voice their grievances, this which causes even more headaches.
The downside is supported by the 1.20 level, and the market is going to have a massive “bottom” at that level. We are likely to see more of a “buy on dips” mentality, as we have seen for some time. This market will struggle to see much momentum, at least for the next few days. Once we get past New Years, the Euro will likely continue to move higher. So you should take any pullbacks as a giveaway, because the trend is very entrenched in this market, and whenever we think the euro is about to roll, there are buyers who jump in and pick it up. I don’t even know it’s a story about the euro itself more than it’s a story about the US dollar, which is being hit against almost everything at the same time. We have seen this in gold, silver, crude oil a handful of currencies.