- The EUR/USD has fallen hard during the trading session on Thursday as we are now below the parity level yet again.
- This is a market that continues to sell off on rallies, especially as the US dollar is like a wrecking ball against everything.
- The European Union has a whole host of issues that the Americans will not be dealing with, not the least of which is the energy situation heading into the winter.
The European Central Bank is supposedly getting ready to raise interest rates by 75 basis points but at this point, that’s probably about as aggressive as they can get. Though they will have to address the fact that the economy is going to come unraveled over the winter. We are already starting to see energy rations, at least in certain countries. The biggest problem that the ECB has is that the various countries in the union are so drastically different and are in different positions.
Expect a Short-term Burst
The size of the candlestick for Thursday is rather big, and it does swallow the previous action over the last couple of weeks. Because of this, the market is likely to continue to see a lot of negative pressure. The market also sees a significant amount of resistance of 1.01 level, an area that has been important a couple of times. If we can break above there, then the EUR/USD will almost certainly offer resistance of the 1.02 level as well, especially as the 50-Day EMA is hanging around in that same general vicinity.
On the downside, if we break down even further, I anticipate that the 0.98 level would be the next target. After that, we could drop down to the 0.96 level. Keep in mind that this pair does tend to be rather choppy, and therefore it’s worth noting that the jobs report coming out of the United States on Friday will probably cause more of that. Furthermore, keep in mind that Wall Street will probably shut down rather quickly on Friday, as it is a 3 day weekend with Monday being Labor Day. Because of this, we probably get a short-term burst in one direction or the other after the Non-Farm Payroll numbers, and then a sudden slowing down of momentum. What I’m hoping for is that this market rallies, so that I can start shorting again either on Monday or even later in the Friday session.
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