The Euro has broken through a massive area that I have been watching for over a year. This is a big sign of what could be coming in the future. The US dollar continues to destroy almost everything it gets near.
EUR/USD
The Euro has broken through a major floor over the last 24 hours, slicing through the 1.14 level. This is an area that I'm watching very closely, and now that we've broken through it, I'm looking to fade short-term rallies.
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This is a major breach of support, and I find that interesting because the interest rates in America continue to fall. So, this is not necessarily an interest rate situation, but I think what we've got is a market that will remain very noisy, and I think it's watching the economic situation in the European Union more than anything else. The United States, of course, is very strong economically, and I think that is not going anywhere in the near-term, as employment remains healthy.
ECB Policy and the Death Cross
The “fear trade”, of course, helped the dollar previously; now I think it comes down to a lot of questions about where the world goes now after the war. I think the European Union finds itself in a very strange place because the ECB did raise rates, but then it started talking about how it expected the economy to slow down. It's a mistake that the ECB has made previously, and I think the market is voting on that right now.
For what it's worth, the 50-day EMA just broke below the 200-day EMA, and that is the so-called death cross that has longer-term traders looking at shorting as well. Now that we've got that and broken through the support level, I suspect we will probably go looking to the 1.12 level.
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