The Euro has finally made a decision to break out. However, the one problem is that it did it the day before a FOMC press conference. Still a bullish look though.
EUR/USD
The Euro has actually done something for once. This is a pair that as an analyst it is very painful to cover at times because it has a history of doing a lot of nothing, jumping for a few weeks, and then doing more nothing. That being said, we have broken above an area on the EUR/USD currency pair that I have had circled since about September 17. This was when Jerome Powell's press conference really rattled the market. Well, we are above there now, which is a very good sign for the Euro.
When you take the technical analysis from the consolidation area, it is 450 pips, give or take a few. That suggests that we could go to the 1.23 level. So I look at this and I realize that it is an area that has mattered more than once. This is an area that has been a significant top multiple times going back about a decade, and then you can see that there is action all the way back to 2015, and even 2012 and 2010. In other words, it is an area that the market likes.
The FOMC Factor
I think that might be where we head because technical analysis suggests that, momentum suggests that, but I don't think we have all clear quite yet. Quite frankly, we have a press conference after the FOMC decision on Wednesday and Jerome Powell could really throw a monkey wrench into this not even meaning to. If he starts talking about sticky inflation, that has people pushing back the time frame of Federal Reserve cuts even further.
So, we will have to see how that plays out. I think a pullback towards the 1.18 level or maybe 1.1850 offers a bit of an opportunity, but you have to see the bounce first. Again, it wouldn't surprise me for this pair to go to 1.23. We have probably seen it 10 to 12 times in my career, so it is a familiar level.
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