- The euro rallied slightly during the early hours on Friday in what would have been very thin trading.
- That being said the market is somewhat impressive in the sense that we haven’t pulled back even in this thin trading now.
- I do recognize that at the moment at least we have a pretty overbought condition.
- So, I'm actually anticipating that we may see this market consolidate a little bit. I think 1.12 underneath is significant support. But if we do continue this move, the 1.15 level above is a gateway to 1.23.
A Resolution Will Be Needed
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I think we need some type of resolution to the trade and tariff situation as well as the bond market situation. But I also think that we are going to have a moment where this thing snaps back and it could be very violent. US bonds have been sold and while there is some talk of weapons in the nation of the bond market, the reality is some countries are in desperate need of US dollars and are trying to hoard them ahead of some potential longer term tariff situation. And one of the quickest way to do that is to sell off bonds and repatriate your dollars. So, in the case of the European Union, it flies back into the euro makes sense. If you're German, you need euros in your banks.
So, there is little of that going on as well. I think you're going to continue to see a lot of noisy behavior here, but as things stand right now, you, I guess, have to assume that the uptrend continues for a while. If we were to break down below the 1.12 level, that could open up a move back down to the 1.09 level, but right now, it doesn't look as likely. It looks like if anything, we may just go sideways for a while and try to carve out a little bit of a range here.
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