- The EUR/USD currency pair initially tried to rally against the US dollar during the trading session on Monday but found the 1.05 level to be a bit too much to get beyond.
- Furthermore, we also have the 200-Day EMA that has offered enough resistance to send the market back down
- At this point, I think it’s probably only a matter of time before we need to make some type of bigger decision.
EUR/USD At An Inflection Point
Look at this chart, you can see we have been chopping back and forth over the last couple of days, so it does suggest that perhaps we are at a reasonable inflection point where a lot of people will be paying attention to. If we were to break above the 1.05 level, then it’s possible that we could go to the 1.0750 level next, as it was a significant resistance barrier. On the other hand, if we turn around and break down below the 1.02 level, then it opens up fresh selling. Either is possible this week, because we have a whole slew of issues on the economic calendar the people will be paying attention to.
Keep in mind that the Core PCE numbers coming out this week are widely followed by the Federal Reserve governors on how inflation is progressing through the economy. As everybody wonders what the Federal Reserve will do, or at least how aggressive they will be about raising rates, this is an indicator that a lot of people will pay close attention to. On the other hand, we also have the job number coming out on Friday that a lot of people will be paying attention to because it could give us a bit of an idea as to what the Federal Reserve may do during the December meeting.
All things being equal, I think this is a situation where you have a lot of volatility just waiting to happen, therefore I think it’s only a matter of time before we see some type of bigger move, but in the short term, it could be very noisy. The Euro has a lot of issues itself, but right now everybody seems to be focusing on the will of the Federal Reserve and what they are getting ready to do next. Ultimately, this is a situation where we have a potential big move, so you most certainly have to pay attention to the next impulse, because it could give us a big trade.
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