- The Euro showed choppy trading on Wednesday as traders sought direction amid global uncertainty.
- Despite Fed rate cuts, stronger U.S. bond yields favor the dollar.
- The analyst sees potential moves toward either 1.14 or 1.17, depending on how the market breaks.
The Euro has been fairly noisy during the trading session here on Wednesday, as we have simply chopped back and forth, trying to sort out what we can do as far as determining the next move. Ultimately, this is a market that I think, given enough time, probably has to make a decision as to where we are going to see the US dollar go. I think the Euro at this point in time is almost an afterthought, basically a situation where the Euro is somewhat wanting, if you will, while the US dollar is likely to continue to see some inflow, as there are concerns about global trade.
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This is a situation where, despite the fact that the Federal Reserve has cut interest rates, the reality is that interest rates in the bond market have risen a bit. This suggests that perhaps markets are going to continue to favor the greenback over the longer term. And I don't really see why that changes at this point. Growth in America and worries about the global economy all tilt towards a stronger US dollar, but I don't necessarily think it's going to be a massive meltdown here.
I believe, given enough time, we will probably go looking to the 1.14 level, which is where the 200-day EMA currently hangs about, and it makes a nice target. If we break down below there, then it will be like a trap door swinging open, and the market will almost certainly plunge. That being said, if we do rally and break above the 50-day EMA, then the 1.17 level probably gets targeted, an area that has been resistant as of late.
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