The Euro has failed at the 50-day exponential moving average again on Tuesday, in a bit of a surprise, as there has been quite a bit of negative news around the US Dollar.
The Euro has failed at the 50-day exponential moving average again on Tuesday, which is a bit surprising as the consumer price index numbers came out a little softer than anticipated. The core CPI number month-over-month was expected to be 0.3%, but it was only 0.2%. The first thought would be that perhaps the US is going to have to be maybe just a slight bit more aggressive about cutting rates, and that should, at least in theory, be US Dollar negative.
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What I find interesting is that not only did we move in the other direction, but we had seen the Monday candlestick really move against the Dollar as it was determined that the Department of Justice was, in fact, investigating Jerome Powell. We gave that back, and then we got more traditionally bearish news for the US Dollar, and the market just ignored it. This tells me that perhaps the Euro might be in a bit of trouble.
Technical Levels and Market Outlook
As things stand right now, I believe the technical analysis is still the same as it has been over the last six months or so, as traders have simply gone back and forth between 1.14 on the bottom and 1.18 on the top. We are getting pretty close to the middle of the range, so I think this is a pretty neutral pair.
I recognize that the resistance near the 1.18 level is pretty stout, and so far, at least, it’s been a situation where every time the market rallies in that direction, you fade the first signs of resistance and do fairly well. I think that continues to be the play going forward, but we’ll just have to wait and see how that turns out.
I am fairly neutral on this, but I suppose I believe that eventually the US Dollar comes out on top. That would change if we could break above the 1.1850 level on a daily close, but right now that doesn’t look likely.
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