- The euro rallied early on Thursday as we continue to reach towards the 1.17 level.
Quite frankly, I think the market is looking for any reason whatsoever to increase risk appetite and the announcement that the Iranians and the Americans are at least talking on Friday in Islamabad has a lot of people taking the optimistic route.
The interest rates in America continue to hover right around the 4.30 level, an area that I think is important and therefore I don't know how much upside we have here. Quite frankly, it probably comes down to whether or not we get some type of peace agreement or at least signs that things are working in that direction.
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So far so good, but there have been a few minor attacks here and there and Israel of course attacking Beirut has asked questions of whether or not the ceasefire will hold as there seems to be some confusion as to whether or not Lebanon was part of the deal.
Nonetheless, the EUR/USD market has recently broken out of a large consolidation pattern so one has to be cognizant of the potential upside here. A move above the 1.1720 level opens up the possibility of a move to the 1.18 level. However, if we were to turn around and break down below the 200-day EMA, then a move down to the 1.15 level I think would be in the cards at that moment.
I expect a lot of choppiness and volatility. Quite frankly, I still believe this pair ends up being rangebound before it's all said and done, but I also recognize that it is almost wholly dependent on the next random headline coming out of the Middle East as it will throw interest rate markets around.
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