(MENAFN- Daily Forex) Potential signal:

• I am selling below the 18.20 level, with a stop at 18.33 and a target of 18.01

The US dollar showed early strength before reversing in thin post-Thanksgiving trading, with choppy action expected. Key levels remain in focus, with downside pressure favored unless major resistance levels break decisively.

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The US dollar initially tried to rally during the trading session on Friday but then turned around and broke down. All things being equal, though, this is a market that has shown itself to be a little bit noisy during the trading session. But you also need to keep in mind that the Friday session was thin volume and shortened due to the fact that although the Americans were technically at work, most Americans don't go to work the day after Thanksgiving.

EURUSD Chart by TradingView

With that being said, the market is likely to continue to see a lot of choppy behavior and more of a fade-on-the-rally type scenario. The 50-day EMA sits just above the 18.44 level. And I think all things being equal, this is a market that I think you have a situation where it's very difficult for this market to break to the upside. And even if it did, the 18.50 level is a bit of a barrier Breakdown Levels

To the downside, if we can break down below the 18.20 level, then I think the US dollar really starts to sell off against the Mexican peso. And you have the wind at your back because not only are traders betting on the idea that the Federal Reserve is going to favor the idea of more interest rates coming out of America, but also you have to keep in mind that the strength of the Mexican interest rate differential means that you get paid at the end of every session. Breaking down below the 18.20 level opens up the possibility of a move down to the 18 Mexican pesos level. And I do think that's probably the play that we are about to see at this juncture. If we turn around and break above the 18.80 level, then it would be a massive turnaround, and you could see the trend change quite rapidly.

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