- The EUR/USD has shot straight up in the air during trading on Monday, as it looks like we are trying to break out. If we can get above this little bit of resistance, we could very well go to the 1.10 level.
- Looking at this chart, if we can break above the 1.08 level, I think that the 1.10 level will happen rather quickly.
- Keep in mind that this is a market that has been shooting straight up in the air, but we have a lot of things we must pay close attention to over the next couple of days.
The first one will be the speech by Jerome Powell on Tuesday, which will certainly have a significant amount of influence on what happens next with the greenback. Keep in mind he cannot be very happy about what’s been going on with the equity markets, so if he does start to be risk appetite, that could send the Euro lower as the US dollar should rally. However, you can’t necessarily guarantee that’s what’s going to happen as he has had a stellar record of causing all kinds of happiness again in both directions.
Waiting for the CPI Numbers
The 50-Day EMA is starting to cross the 200-Day EMA, forming the so-called “golden cross.” This of course is a very bullish technical indicator, that a lot of people really like to use for longer-term “buy-and-hold” signals. However, it’s typically a very late signal, and whether it works is completely open for debate. Even mind that the fundamentals may or may not work out in your favor, especially as the CPI numbers come out on Thursday. If it’s hotter than anticipated, the CPI numbers could send money screaming right back to the US dollar.
It is difficult to argue with the momentum, so I certainly think that we are on the verge of breaking out. If we don’t, it would be a bit surprising considering how strong this move has been, but the scenarios I listed above would probably be a major influence on that happening. All things being equal, it looks bullish and even though I don’t like the Euro longer-term, it’s hard to argue with the market when it is so bullish all a sudden.
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