The Euro broke lower in trading on Tuesday, as the war in Iran continues. The expansion of war is obviously a serious problem, and the Qatari ceasing of natural gas production will be a major issue for Europe.
EUR/USD
The Euro broke significantly during the trading session on Tuesday, slicing through the 200-day EMA in a very negative turn of events. All things being equal, the 1.15 level is an area that I think a lot of people will continue to be an area of massive support. I do think that given enough time, if we were to break down below there, it is likely that we will see this market completely fall apart, perhaps down to the 1.11 level.
The Euro is going to be in a lot of trouble as the natural gas supply to the European Union has basically been cut off. Unfortunately for the Europeans, it means that they will be doing a lot of importing US natural gas, which gets very expensive very quickly. With that being the case, I think you have to understand that there might be a bit of a serious problem with the Europeans.
Short-Term Rallies as Selling Opportunities
This is still a fluid situation obviously. Overall, I think this is a scenario that you have to be cognizant of. If we get a short-term rally, it is probably going to end up being a selling opportunity on signs of exhaustion. I think this continues to be a very short-term focused pair.
I do not know that you will have the ability to really just hang on to a position either up or down. Ultimately, we default back to short-term essentially day trading and the closing at the end of the session on Tuesday will be crucial. Any rally at this point in time, I think continues to be a selling opportunity and really, I am not convinced of strength until we are above 1.18.