The Euro rallied just a bit during the trading session on Tuesday as we continue to see a little bit of a recovery. I think it’s only a matter of time before we see resistance. The 50-Day EMA sits just above, and it is walking right along with 80 major downtrend line.
No interest in buying Euro
At this point, I’m simply waiting for some kind of exhaustion candlestick to start shorting so I can pick up “cheap US dollars.” I have no interest in trying to buy the Euro, because the European Union has a major amount of problems that it’s going to have to deal with. Ultimately, I think this is a situation where you have the volatility coming from time to time that can give you an opportunity to start shorting every time we run into trouble.
I think that the Euro has much further to go to the downside, so I look at bounces like this as time to do a little bit of research, perhaps even take some time off. I believe it’s only a matter of time before we see another blow to the European economy, perhaps in the form of winter.
Remember, the Europeans are going to be forced to ration energy this winter, and in that scenario an economy does not take off.
The 0.95 level underneath will be tested again, and perhaps even broken through.
If we break down through that level, then I think we got a real shot at going much lower, perhaps trying to get down to the 0.93 level.
On the other hand, if we were to turn around and take out the parity level, then you might have the possibility of a bigger rally, but I just don’t see how that happens.
That would almost certainly need to be due to a pivot by the Federal Reserve, and therefore I mean the monetary policy tightening would have to suddenly reverse. I just don’t see how that happens, as long as inflation in the United States continues to scream higher, now still at above 8% year-over-year. As long that’s going to be the case, the Federal Reserve has no choice but to continue to tighten going forward, despite the fact that it is probably going to run everybody into a recession.
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