The Euro rallied a bit in the early part of the session on Monday, but at this point in time, the overall consolidation continues. The interest rate differential favors the U.S. and should continue to. I am selling when I can here.
EUR/USD
The euro has rallied quite significantly during the trading session here on Monday to kick off the week, but let's be honest here: the reality is that the interest rate differential still favors the United States, and the market is also going to pay close attention to the fact that the ECB was a bit noncommittal about its monetary policy going forward. This is a moving target as far as I can see.
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The Federal Reserve, on the other hand, is likely to raise rates in December, and of course, the real return that you get in real rates in the United States also continues to put downward pressure on this pair. Energy shortages in the European Union this winter are a real possibility, and that, of course, would have a major influence on the European economy.
The 50-day EMA sits just below the 1.13 level
The 50-day EMA sits just below the 1.13 level, and the 1.1350 level is significant from a market memory perspective. I think at this point in time, rallies are to be faded. Signs of exhaustion probably offer selling opportunities, but I think at this point in time, it's more or less a continuation of the overall consolidation than anything else.
I don't necessarily think that we're going to fall apart here, but I do favor the downside in general. This is a ‘fade the rally’ type of situation for this pair, as we have plenty of negatives in this market. If I wanted to short the U.S. dollar, then I will do it somewhere else.
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