- The EUR/USD initially tried to rally during the trading session on Thursday but continues to struggle above the 1.08 level.
- As a result, this is a market that I think is going to continue to have trouble holding on to gains, as there is obviously a lot of noisy behavior out there.
- Furthermore, there are a lot of arguments as to what the Federal Reserve is going to do next, and this obviously has a major influence on what happens with this pair.
A lot of pundits believe that the Federal Reserve is going to have to slow down rate hikes rather quickly, based on the economic announcements. However, the reality is that the Federal Reserve has gone pretty far out of its way to reiterate the desire to stay tight for a long period of time. Because of this, we could very well see a situation where the market continues to be hauled hostage by a bunch of
“hopium”, as traders are used to the Federal Reserve doing everything, he can bail them out.
Market Likely to Continue Going Higher
If we were to break above the highs of the session on Wednesday, I think that would be a very bullish sign and could send this market looking to reach the 1.10 level at that point. On the other hand, if we were to turn around and break down below the 1.07 level and open the move down to the 50-Day EMA. This has been a very impressive rally for some time, but now one has to wonder how much longer we have. A lot of traders believe that the market will continue to go higher, but there are also other things out there that could come to the forefront, such as risk appetite being eviscerated.
After all, we have a lot of potentially bad headlines out there waiting to hit, and therefore all it would take is a little bit of fear out there to make people run right back to the US dollar. I believe at this point we are at the very least going to go sideways for a while, but a pullback does make a certain amount of sense. Pay attention to the 10-year note in the United States, because the EUR/USD currency pair is moving almost tick for tick with that chart.
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