The EUR/USD rallied a bit during the trading session on Tuesday but continues to see a lot of problems to get going to the upside. This is a market that at the signs of exhaustion that you will get from time to time, it’s likely that the sellers will come back into the market to punish the euro. After all, the US dollar is by far the strongest currency out there, and I just don’t see how those changes anytime soon.
The 1.02 level is an area that you need to pay close attention to because it is a significant resistance barrier. Breaking above that, which also would mean breaking above the 50-Day EMA, would be a very bullish sign. I don’t see how that happens, so more likely than not, we have a situation where you are going to fade rallies regardless. Keep in mind that the jobs number comes out on Friday, so we may have the markets calmed down quite a bit over the next couple of days, waiting for crucial economic information. Paragraph if we break down from here, I don’t necessarily think that we are going to slice through all that support, mainly because the markets will be waiting for the jobs figure.
Eyes Are on the Federal Reserve
- You must keep it that a lot of people are wondering whether the Federal Reserve is going to continue to be as aggressive as they say, but right now there is nothing out there to tell me that they won’t.
- The European Central Bank supposedly could be raising rates by 75 basis points, but it’s hard to imagine that they are going to get anywhere near as aggressive as the Federal Reserve. After all, the European Union will continue to suffer at the hands of a lot of issues at the same time, not the least of which is a lack of energy.
- I do believe at this point it’s likely that the Euro will continue to be a bit of a punching bag.
If the market does not see any type of shock, it’s likely that we will continue to see a tendency to fade the common currency. If there are economic concerns out there, it does make a certain amount of sense of the US dollar should continue to strengthen anyway.
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