The Euro is consolidating before its next move
The single European currency is trading in a tight range as the re-balancing act of negative Euro Zone inflation data and geopolitical tensions receding just a touch is taking its toll on market activity.
The EUR/USD binary options forex pair has traded as low as 1.3880 in the morning, which was only a play to trigger some stops. By the start of the New York session the single currency has rebounded to mark a daily high at 1.3948. We are looking for clues to take a position in this pair.
As you can see from our chart the main levels are situated in a range of about 50 pips. On the downside the first support that is apparent is the 1.3900 level, while on the topside we are looking at 1.3955 to cap rallies. For the time being we would like to take a breakout trade so we have two scenarios.
The first one is tied to the pair moving lower and testing 1.39. Assuming that we get an hourly close below 1.39 we would be very keen to purchase daily put options around there. The main reason behind such a move could be a weak ZEW number from Germany tomorrow at 10:00 GMT.
The second scenario is a move to the upside that would trigger the buying of daily call options. The level at which we are looking is 1.3955 - of we get an hourly close above it, that would result in an attempt to break higher and subsequently test last week's highs around 1.3966.
Both scenarios are dependent on the outcome of tomorrow's numbers from the EU and the US. In such volatile markets it is not out of the question if we get two signals to be triggered. If that will be the case, we will not hesitate to trade. Sitting idle and waiting has not made anyone much money. Have fun and enjoy our forecasts and signals.