EUR/USD bounced early Thursday, but the overall attitude of the markets continues to move on “hawkish” central banks, and the overall rate situation in the USA.
The Euro has rallied a bit in the early hours of Thursday trading, but really at this point in time, we've got a situation where traders are trying to figure out whether or not the market can turn around and show signs of life, or if it is a situation where we're just bouncing and could start to sell off again.
After all, this is a market that faces an interest rate situation where it looks like the Federal Reserve will be on hold for a while, but at the same time, we'll have the European Central Bank on hold, but at lower rates. Furthermore, you have to wonder whether or not the energy situation continues to be a major problem for the Europeans, while the Americans, of course, can drill their own and have a much more secure source of energy.
Watching the 200 Day EMA
That being said, we are also below the 200-day EMA, and the 200-day EMA, of course, is an indicator that a lot of people will be watching. Being below does technically mean that we're in a downtrend, although one quick glance at the chart you can see that we are just at the bottom of a range. I think rallies continue to get faded here.
At the first signs, I don't have any real interest in trying to buy the euro, at least not yet, but if we were to break above the 1.1650 level, it would be a sign of resilience that you must pay attention to. In that environment, we could see a recovery towards 1.18, but I don't think this is the most likely of the situations.
I believe that we are an environment where we continue to see a lot of US dollar strength on the whole.
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