It’s almost impossible to imagine a situation where the European Central Bank would be able to get aggressively tight, so I do think that we have a situation where the market will simply look at any rally as an opportunity to pick up “cheap US dollars”, which of course is the name of the game.
- The EUR/USD continues to go back and forth during the trading session on Monday, as we seem to be attracted to the parity level.
- Now that we have the interest rate hike coming, it’s more likely than not that we are going to see this market jump around and wait to see what the statement is.
- The statement, and perhaps even more importantly, the press conference, after the rate hike, is probably the big deal this week.
- I do believe that given enough time we probably see this market make a lot of noise, but eventually, I would not be surprised at all to see a bit of a breakdown.
The Euro is a currency that I would have no interest in buying because there’s nothing good coming out of the European Union. Furthermore, the Federal Reserve is going to remain aggressive, but at this point, it’s just a question of “how aggressive?” Because of this, I think that we have a situation where we could see a lot of noisy behavior, but whether we get any traction would be a different question altogether. On any rally, the 50-Day EMA must come into the picture as potential resistance, especially as there is a major “downtrend line” sitting just above it.
Markets Waiting for Rallies to Start Shorting
I do believe that every time this market rallies, there will be plenty of sellers willing to get involved and start shorting. I don’t think this is a situation where you would have anything good to say about the European Union, and of course, the fact that we are going to have to worry about energy this winter will only add more pressure to the market.
It’s almost impossible to imagine a situation where the European Central Bank would be able to get aggressively tight, so I do think that we have a situation where the market will simply look at any rally as an opportunity to pick up “cheap US dollars”, which of course is the name of the game. Ultimately, I think you are looking for value every time you get an opportunity to short a rally, but the next day or 2 might be rather quiet and choppy as we wait for the next fundamental move. Position sizing will be crucial as well.