- The euro has initially fallen during the trading session here on Monday to break down to test this crucial uptrend line. That being said, it does look like they are at least trying to save the euro in early trading. A lot of things are going on in this chart that you may or may not be aware of.
- The 50-day EMA and the uptrend line, both of course, offer a certain amount of support. But what really captures my attention at the moment at least, is the fact that the peak was the FOMC press conference. We haven't broken above that high since. And while everybody is suggesting that the US dollar is going to collapse and the world's reserve currency will become the Chinese Yuan, the reality is the US dollar isn't going anywhere. And I think we're on the precipice of something rather big.
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Time to Short? Maybe Not Yet.
Now, I can't say that it's time to start shorting quite yet. But if this pair breaks down below the 1.16 level, I won't hesitate because it has shown me that, despite the fact that there is a central bank in the United States likely to cut rates at least one or two more times, the reality is people are starting to worry about the health of the global economic situation. And if that's the case, that's pro US dollar. You need US dollars to cover your debts. So, beyond that, I also think you need to keep an eye on the U.S. Treasury market. If rates start dropping, that could be a sign that people are preparing for the Fed to cut, but it could also be a sign that people are running to safety. And if that's the case, if you're in Europe, you need dollars to do that. If you're in Great Britain, you will also need dollars to buy US Treasuries. So, a little bit of a push and pull situation here. On the upside, if we can break above the 1.18 level on a daily close again, then maybe we try to take out the high and go look into the 1.20 level. But right now, it's not showing the proclivity to suddenly take off like I think a lot of you may have been anticipating.
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