The market is likely to see a lot of noise in general, but at this point in time, it is likely that we will continue to have to watch the rate yields in the US for clues.
EUR/USD
The Euro initially tried to rally against the US Dollar during trading on Wednesday but yet again we are starting to see a lot of questions asked about whether or not the Americans and the Iranians are actually speaking with any type of purpose. After all the market is likely to continue to see a lot of noise coming out of social media via Donald Trump but at the same time the Iranians continue to choose not to be bothered to discuss in the terms that the Americans and the Israelis like.
Because of this we have a market that will continue to see a lot of hesitation to take any type of risk and the market breaking back down makes a lot of sense considering that the US Dollar is considered to be a safety currency. And of course, interest rates in America continue to bounce and rally. This is a situation where the USD becomes the prime asset to won, especially as it is “safety” as well.
Yield Differentials and Support Levels
The market breaking above the 4.30 level was a major breakout and that means that people are going to be more attracted to the Dollar with its higher yield. Ultimately, I do think this pair probably breaks down from here and I am looking for a return to the 1.15 level unless of course there is some type of really good news coming out of the Middle East. For that I would not hold my breath. I think we are stuck in the same range we have been in for about a month.