- The EUR/USD has been rather resilient over the last several sessions, and although we have not had a major breakout yet, it certainly looks as if the market is “leaning” toward the upside.
- We get the Consumer Price Index on Thursday, and that could very well determine where this market goes next.
- Keep in mind, the Federal Reserve is being forced to finally pay attention to the US public, as inflation has gotten hot enough that they can start to focus on what moves the economy.
For the last 14 years, the Federal Reserve has focused solely on Wall Street, and now faces a serious dilemma: Inflation is so hot in the United States that they must do something to destroy demand. This means taking bubbles down, and what makes this so unique is that the US dollar is used in a lot of international transactions. In other words, they will more likely than not drive the rest of the world into some form of recession.
Euro Looks More Bullish
The question now is whether the European Union follows right along. Quite frankly, the European Union has a whole host of issues, but one thing that has helped the Euro and all things European over the last couple of months has been the fact that temperatures have remained relatively mild in the EU, alleviating some of the concerns that we had seen in the natural gas markets. Because of this, I believe it is probably only a matter of time before we must make a bigger decision, and Thursday may give us that answer. If we can break above the 1.08 level, then I think this market is going to go much higher, perhaps reaching the 1.10 level.
On the other hand, if we turn around and fall from here, we could go looking toward the lows of last Friday, which also coincides quite nicely with the 50-Day EMA. While the fundamentals don’t necessarily scream that this market should go higher, the reality is that the market is going to do whatever it wants to do. Right now, the Euro looks more bullish than anything else, but we will have to see how Thursday shakes out to get an idea as to where we go next. Remember, your job isn’t to be right, it’s to be profitable.
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