- The EUR/USD currrency pair has rallied ever so slightly during the trading session on Tuesday to show signs of life again as it looks like we are trying to do everything we can to break above the 1.0750 level.
- This is an area that will attract a lot of attention, perhaps extending all the way to the 1.08 level, where I think there is even more resistance.
- If we can get past all of this, then it’s possible that the Euro can continue to go higher.
- For what it is worth, it looks as if the “golden cross” has recently happened, meaning that the 50-Day EMA as broken above the 200-Day EMA.
Consumer Price Index Data on Thursday
Nonetheless, it’s worth noting that the Consumer Price Index numbers come out on Thursday, and people will be paying close attention to that reading, because it could give us a bit of a “heads up” as to what the Federal Reserve is going to be doing going forward. That being said, inflation is still far too hot, and I think that we have a situation where the Federal Reserve will remain tight much longer than anticipated. For what it is worth, the European Central Bank is also fighting inflation, but is very possible that the ECB may have to blink first.
Regardless, it looks as if this market is bullish, so breaking above the 1.08 level will allow for the Euro to continue going higher. However, if we were to turn around and break down below the lows of the Friday session, that could send this market much lower, because it would not only be a significant turnaround, but it would blow through the support that we had recently seen. At this point, it looks like the Euro is trying to do everything you can to break out, but we need to get through the Thursday session to be completely comfortable. The US dollar has been on the back foot for a couple of months now, but when you look at the longer-term trend, we are still very much in the phase of a “bear market rally” more than anything else.
Right now, I think the only thing you can count on is a lot of volatility, so therefore you need to be cautious with your position sizing, as I expect a lot of noisy behavior over the next several days.
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