- The EUR/USD currency pair initially shot higher during the trading session on Wednesday, but gave bank gain as we continue to see a lot of resistance above.
- Because of this, the market is one that looks like it’s not quite ready to do anything at this point.
- I also believe that you will need to pay close attention to the bond market, because the 10 year note in the United States and the EUR/USD pair are moving in lockstep with each other.
Fundamentals Are the Key
This tells me that the market still is focused on central banks more than anything else. In this environment, there’s a lot of fear out there and it will be interesting to see how this plays out but I do think that we’ve got a scenario where we could start to see the US dollar turn things around if we have to worry about recessionary problems.
Quite frankly, the economic numbers lately have not necessarily been impressive for the world, as the UK is still showing extraordinarily high inflation, while production has slowed down in the United States. Furthermore, you have the concerns in China, with its major exports being absolutely crushed. Exports are down across the planet, so on the “Chinese reopening” may help a bit, but it’s not necessarily going to make the Americans or the European start buying things. In other words, the idea of a “soft landing” is probably difficult to fathom at this point.
In general, this is a market that’s been in a nice uptrend, but it does appear that the 1.08 level continues to be very difficult to overcome, and even though we’ve had a bit of consolidation as of late, the question now has to be whether or not we have run out of momentum. It might be early to call for a turnaround, but we are both certainly showing signs of lackluster behavior. In this environment, if we continue to get shocks to the system that will almost certainly favor the US dollar in general, and of course work against the Euro, despite the fact that the European Central Bank continues to preach hawkish behavior. I think at this point, we probably see significant support of the 1.06 area, so that might be where we had on some type of bad news. If we can break above the highs, that is possible that we go looking to the 1.10 level given enough time.
Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.