The Euro rose a bit in the early part of the Wednesday session, as we see the 1.18 level offers a bit of a magnet for price.
EUR/USD
The Euro rallied a bit during the trading session on Wednesday as it looks like the 1.18 level is being threatened yet again. This is a market that I think given enough time probably finds a reason to go higher, but the question is whether or not we can break above the crucial 1.1850 level.
If that happens, then we should continue to see some bullish pressure here. I think we have to keep in mind that the markets at the moment are looking very much like a situation where we are trying to determine whether or not the Federal Reserve will cut rates.
Central Bank Policy and Market Volatility
Right now, they are starting to bet that they are going to cut rapidly sometime later this year and into 2027 and that gives the Euro a little bit of a reprieve. At the same time, we have the European Central Bank and its flat monetary policy and therefore I think it is a known quantity.
There is not a real reason to get overly excited about the Euro, but it at least takes out part of the equation as we now know that the interest rate coming out of the ECB will remain. I do think that we see a lot of choppy and noisy behavior in general, and I think that we need to watch very closely as to whether or not we can break the 1.1850 level because it could open up a move to the 1.20 level.
If we were to break down below the 1.17 level, then that opens up a move down to the 1.16 level, but right now I do not think that happens. I think more than anything else we see a lot of sideways back and forth action.