- The EUR/USD has gone back and forth during the trading session on Tuesday as we continue to see plenty of volatility on short-term charges.
- The market is likely to continue to see plenty of selling opportunities.
- The market will continue to be difficult to break out from, but it’s likely that we will continue to see the occasional attempts. After all, the Euro has not been this low for over 20 years.
The 50-Day EMA sits near the 1.02 level and is dropping. The 50-Day EMA is dynamic resistance, as you can see over the last several months. If we get anywhere near it, I will anticipate that there should be plenty of sellers. There’s no reason to think that this market is going to change attitude anytime soon because there is not enough out there to change the overall attitude of markets for a bigger move. After all, the European Union must worry about energy this winter, unlike the United States.
Downward Pressure Ahead
The Federal Reserve continues to tighten monetary policy, and that of course is something that will drive the value of the US dollar higher. There is a central bank meeting this week in the European Union, and they are expected to raise rates. For what it’s worth, the current expectation is that the ECB will raise rates by 75 basis points, so if they do not raise as much, it could very well send this market lower.
Nonetheless, this is a market that I think will continue to look at the 1.01 level above as short-term resistance as we have been going back and forth in that range for the last couple of weeks. If we do break above there, then it’s that 50-Day EMA again that we would be paying attention to. On a breakdown from here, then it’s likely that we go down to the 0.98 level and therefore could threaten a significant support level on a longer-term chart. The market is likely to continue seeing downward pressure anytime the slightest hint of bullishness comes back into this market. Until the Federal Reserve changes its tune, or the Europeans find a significant amount of natural gas, it’s likely that the Euro will continue to drop against the greenback, and other currencies as well.
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