The Euro continues to see choppiness at the point, as the interest rate markets in both the USA and Germany are elevated. Nonetheless, this is a market that will remain lackluster as we are still in consolidation.
EUR/USD
The Euro rallied slightly against the US dollar during trading on Tuesday as we continue to see the 50-day EMA offer a bit of support. Interest rates in the United States dropped a bit during the trading session on Tuesday and that has had a positive influence on the Euro or perhaps better put this is a negative influence on the US dollar.
Overall, I think this is a situation where traders will continue to look at this through the idea of whether or not the European yield will end up being positive or negative for the European Union. That being said there is also a lot of concerns when it comes to energy in the European Union which of course could have a major negative and detrimental influence on industrial bases such as Germany which of course will drive most of what's going to happen with the Euro.
Consolidation and Support Levels
Longer term we are in a consolidation range between the 1.1850 level above and the 1.14 level underneath. With this being said the market will likely continue to be a noisy and choppy market but if we were to break down below the 1.1660 level then I think we could go much lower. This isn’t something I expect to happen quickly, but it is a scenario that has to be thought of.
In general, we are getting fairly close to the middle, so a little bit of support makes sense, but I believe that the choppy sideways action is probably going to be the predominant force here in what is a choppy pair most times.