- The euro initially rallied on Tuesday but gave up gains as we continue to see a lot of noisy behavior in the bond markets.
- The US yields started to rise, and that of course made the US dollar rally against the euro and multiple other currencies.
- That being said, it'll be interesting to see how this plays out because quite frankly, this is a market that has to deal with a lot of different moving pieces at the same time.
What I mean by this is that we have the expectations of the Federal Reserve cutting rates in 2024, but at the same time, we have to question whether or not the European Central Bank will have to do the same with Germany entering recession. Because of this, there has been an extreme amount of uncertainty in the markets. I think that probably continues to be the case unfortunately. And as a result, I expect a very noisy choppy sideways year overall. In the short term, if we do break down from here, the 200 day EMA comes into the picture near the 1.08 level.
After that, the 1.0750 level then offers support. Anything below that level could get rather ugly, but right now I don’t think that we are going to break down there in the short term. If we were, then the 1.05 level could be targeted but it would also take some type of shift in the overall attitude in general. That would be a situation where we would see a lot of US dollar strength overall, not just against the Euro (chack out consistenly updating EURUSD price).
If we were to turn around and take out the top of the candlestick for the day on Tuesday, that could send the euro looking to the 1.10 level above, which of course has been resistance. The 1.10 level of course attracts a lot of attention because of its past action, as it should have a certain amount of market memory attached to it if nothing else. Because of this, I think you are going to be better off waiting until we hit the outer edges of the overall trading range of 1.10 down to the 1.0750 level to put any serious money to work. Right now, it certainly does look like the sellers are starting to take control though.
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