• The euro tried to rally a bit during the trading session on Wednesday, but at this point we are still hanging around the same gap that we had formed a couple of weeks ago.
• This does make a certain amount of sense because we are still looking at the European elections, especially France.
• But we also have to pay close attention to the fact that the United Kingdom has parliament elections during the Thursday session.

There will be a significant amount of liquidity taken out of the market due to the US celebrating Independence Day. So with all of that, it makes sense that this is a market that we will continue to see a lot of indecision, a lot of lack of momentum. Therefore, I think we have to look at this through the prism of whether or not we can break above the 0.85 level. If we were to break above the 0.85 level, that would be a very bullish sign, but you can see we have already tried to do that and failed. The 50 day EMA is an indicator that is back in that area up. It does look like it's going to be a significant barrier as well.
 

Underneath we have Support

Underneath we have the 0.84 level worth paying attention to as it is the floor in the market. If we break down below 0.84 that would be extraordinarily negative and at that point in time, we could see the euro really fall apart. All of that being said this is an area that the market has seen support in previously, so I think it all comes down to the question of whether or not longer term support holds. I do think it does.

(Click on image to enlarge)

Although a lot could change with the UK elections, we'll just have to wait and see. I am more apt to buy the dip at the moment, but I also recognize that this is a very choppy pair and it's also summertime, which takes away some of the liquidity as well.

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