EUR/USD Forecast: Euro Trying to Find Support at the 50 Day EMA
The euro has gone back and forth during the trading session on Thursday as we continue to see the 50-day EMA offering support.
The market is of course going to be watching the 50-day EMA as a floor and so far, it does look like it's trying to hold up.
It is worth noting that the 10-year yield in the United States rose pretty significantly early during the session only to give that back up. Ultimately when I look at the EUR/USD chart, if we break down below the 50-day EMA then we could drop down to the 200-day EMA. To the upside of the 1.18 level is a barrier that I think is thick. It extends all the way to the 1.1850 level.
Interest Rate Differentials and Energy Prism
With this, I think you have a situation where traders are looking at this through the interest rate differential which favors the United States, but you should also keep in mind that traders are going to be looking at this through the prism of energy in the European Union as well.
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After all, if there's a major disruption in energy coming out of the Middle East to the European Union that's going to have a massive influence on how their economies perform. So really at this point I think a little of a bounce makes a certain amount of sense, but there is a lot of resistance above and I think that will continue to be a bit of a struggle to get beyond there.
Really the only thing that I could see happening is if we see an end to the conflict in the Middle East. If we don't, then you can look at this from a longer-term standpoint between the 1.14 and the 1.1850 level, but really, I think you've got a situation where you're looking at this through the eyes of a range that's getting close to the middle, so things might get choppy.
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