- The EUR/USD showed signs of hesitation during trading on Thursday, as it initially tried to rally but ultimately gave back early gains.
- The market is closely watching the 200-Day EMA, which has offered support for a couple of days in a row.
- However, with Jerome Powell suggesting that interest rates in America will continue to climb, and perhaps even at a faster pace than originally thought, it makes sense that the US dollar might gain momentum.
- This means that traders should pay close attention to whether or not the Euro can break down below the 1.05 level.
While there is a possibility that the Euro could bounce and reach the 50-Day EMA above, which sits near the 1.0650 level, the market tends to get very choppy when it is trading between these two moving averages. Moreover, the market previously bounced significantly to the 50% Fibonacci level and has since fallen significantly, indicating that we are in the midst of breaking back down for a bigger move to the downside.
Consider Selling Rallies
If the Euro does break down below the 1.05 level, the next potential target is the 1.03 level, followed by parity. The parity level will attract a lot of attention and make good financial headlines. It is also an area where one would have to expect a lot of options and barriers to be erected, making it difficult to break through. Either way, it is likely that the market will try to get down there given enough time, so traders should consider selling rallies.
The Euro is facing uncertainty and hesitation as traders watch the market closely. The 200-Day EMA has provided support, but with Jerome Powell suggesting that interest rates in America will continue to climb, the US dollar may gain momentum. Traders should pay attention to whether or not the Euro can break down below the 1.05 level, as this could lead to a larger move to the downside. If this occurs, the next potential targets are the 1.03 level and parity. Traders should be prepared for volatility and consider selling rallies as the market moves forward. After all, the most recent moves of any consequence have all favored the downside in favor of the United States dollar, and with a lot of the uncertainty out there, this does make quite a bit of sense from a fundamental standpoint.
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