The big picture of course is something that we have to pay attention to, as the interest rates continue to move wildly.
EUR/USD
The Euro has initially fallen against the US dollar as interest rates in America rose, but we have seen a little bit of a get back by the dollar and this suggests that technical traders are at least paying attention as the 50-day EMA continues to be of at least some interest.
With this being the case, I think we have a situation where the traders will be looking at this as to whether or not the Euro can bounce towards the 1.18 level or do we break down below the 50-day EMA and go looking to the 1.16 level. I also recognize that the markets will be moving on interest rate differential between the United States and mainly Germany, but the headlines in the Middle East also have people worried about the flow of crude oil.
The Influence of Energy Markets and Geopolitical Shifts
Interestingly enough and I'm not sure what this means yet, the big picture of course is something that we'll have to pay attention to, but the United Arab Emirates left OPEC today. They will be leaving OPEC starting May 1. In other words, a couple days. So, with that, it could have some play on the dynamics of the energy markets, but I digress.
The biggest concern here is whether or not Germany gets power. Germany is the biggest industrial base in the European Union by far and a major player in the world stage. With that, you should keep in mind that as Germany goes, so goes the Euro and most of the European Union.
The US dollar is somewhat stubborn, but we have seen a little bit of a divergence late in the day on Tuesday as the dollar fell while rates started to continue to go higher during New York trading. Very interesting dynamic. I think we're just kind of stuck in a bit of neutrality at the moment. I do think the area right around 1.18 is significant resistance.