The EUR/USD has broken down a bit during the trading session on Monday but turned around to show signs of life. We are still well below the parity level, so I think it does suggest that perhaps the Euro is going to continue going lower given enough time, and it is probably worth noting that the previous candlestick is an inverted hammer, and that suggests that the sellers are still very much in control of the market.
If we were to break above the top of the inverted hammer, then that would obviously be a very bullish sign. The 50-Day EMA is sitting right around the 1.02 level and dropping. I believe that level should continue to be paid close attention to, and therefore I think it is only a matter of time before the sellers would return, even pushing this market lower. There is no fundamental reason for the Euro to take off.
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- The European Union has a lot of issues ahead, not the least of which will be the fact that the Russians are shutting off the gas.
- The only way they can get natural gas at this point from that source is going to be repurchasing it from China, which of course is going to add a nice markup.
- In other words, if the Europeans do in fact get some type of reprieve to a lack of gas, it’s going to pay dearly. In that sense, the economy is going to be crippled, at best.
If the market were to break down below the candlestick from the Monday session, then it’s likely that we could drop down to the 0.98 level. I think that eventually happens, but we are in a very volatile market, so the best way to trade the Euro over the last several months has been to let it bounce, and then start shorting it again. I have no interest whatsoever in trying to buy the Euro anytime soon, at least not until the monetary policy in the United States changes, something that isn’t going to happen anytime soon. With that being the case, the market is likely to see a lot of noise, but I don’t see any reason why this market would change anytime soon, as there is so many negatives attached to the EU itself.
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