Euro rallies against US dollar to start week

The Euro rallied significantly during the trading session on Monday, as we approach the 1.20 level. The market looks likely to continue to try to break above the 1.20 level, as we would more than likely reach towards the 1.21 level after that. I believe that the 1.21 level will be much more significant than the 1.20 level, as it was previous resistance and should now be again due to historical action.

In the short term, I believe that we rally based upon the hammer that formed on the weekly chart. It is a very strong sign of support, and I think that perhaps the Euro is oversold if nothing else. I believe that a short-term bounce makes a lot of sense, especially as there are people out there willing to question whether the Federal Reserve will raise interest rates as it previously was thought to. I think that this is more of a technical bounce than anything else, and I suspect that the 1.21 level above is where the major barrier is. If we were to break above there, then the market could go much higher, but right now I believe that we won’t be able to do so in a single attempt anyway. If we turn around and rollover, a breakdown below the 1.19 level would signal that perhaps it’s time to start selling this pair again.