The euro has had a volatile month, and as you can see on the monthly chart, we are trying to form a bit of a hammer. It looks as if we are trying to build up the necessary momentum to go looking towards higher levels, with an eye on the 1.23 level, extending all the way to the 1.25 handle. The 200 points in that area suggests massive resistance, and I do think that it is going to take a lot of work to get through there.
It is worth paying attention to the fact that the bond yields in the United States are spiking, and they are playing havoc with not only the equity markets, but also the currency markets. The 1.20 level underneath will offer support extending down to the 1.19 level, and I do believe that the month of March is going to be very volatile and choppy, but it also looks as if it is going to continue to favor the upside in general. I do not know whether or not we can break out during the month of March, but clearly it looks as if we will probably make some type of an attempt to do so.
If we do break down below the 1.19 level, that would open up another a couple of handles and it could be very bearish for the euro. When we look at the European economy, one of the things that people worry about the most is the lack of vaccinations, so we will see whether or not the news is better when it comes to the numbers. So far, the European Union has been lagging behind everybody else, so sooner or later that could cause a problem. In the short term though, this is a market that I think will continue to see a lot of noise, which is typical for the EUR/USD pair anyway, but I do think that as time goes on people will continue to focus on the idea of stimulus and the easing monetary policy that is coming out of the United States. That should continue to work against the value of the dollar, but there are economic concerns out there and interest rate differentials that could throw a wrench into the situation going forward. We have clearly defined boundaries that we need to pay attention to.
