- The EUR/USD has pulled back just a bit from the 200-Day EMA during the trading session on Friday, as we are heading into the weekend on the back foot.
- The Euro has no business rallying for a longer-term move, even though the ECB is trying to pretend that it is going to be tight going forward.
- It may be for a little while, but the reality is that it is only a matter time before we see the economic conditions warrant some type of fiscal support.
- True, there is a certain amount of inflation out there, but when you have an economy that is worried about energy, you don’t have much choice but to try to support it.
Rallies now look suspicious to me, and it appears that the 1.04 level is also an area that has previously been important, and of course we have the 200-Day EMA between here and there. If we break down below the bottom of the shooting star from the Tuesday session, that opens the possibility of a move down to the 1.01 level, and then possibly even down to the parity level, where we would run into the 50-Day EMA.
Not Interested in Buying the Euro
The Euro has gotten a little bit of abuse since CPI numbers came out softer than anticipated last week, but since then we have seen the Federal Reserve reiterate its desire to stay tight for longer, even though Wall Street is trying to push it into giving out cheap and easy money, as it has done for the last 14 years. This is a monster that the Federal Reserve created, and it’s up to the Federal Reserve to kill it.
At this point, I do think that we have got a little overextended so I’m looking to short this market. Whether or not we continue the longer-term trend remains to be seen, but now we are still in a negative trend and that is something that we need to be very cautious on. With this, I look at this as a situation where you must look to it as a potential “fade the rally” type of setup yet again. I have no interest in buying the Euro, and quite frankly if the US dollar is done rallying longer-term, I’d be looking at other currencies.
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