- It’s obvious that the EUR/USD currency pair has no idea what to do with itself.
- This makes a lot of sense, considering that we get a lot of major inflation news over the next couple of days.
- We get the Consumer Price Index numbers on Thursday, followed by the Producer Price Index numbers on Friday.
- With that being said, the market is likely to be very noisy over the next couple of sessions, and it does make a certain amount of sense that we went to the 1.08 level.
The 1.08 level has been a very important level multiple times, and therefore I think it’s a situation where traders are paying close attention to what’s going on from an inflationary standpoint in the United States, because we have already seen the European Central Bank cut rates, so the question now is whether or not the Federal Reserve will do the same. This of course is what a lot of institutional traders are begging for, because quite frankly most of them have never lived through a situation where interest rates were actually offering a real rate of return.
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Point of Inflection
This could be a major point of inflection for this currency pair, and if we do take off to the upside, I think this is a situation where the next large round figure will be the thing that stops the euro. If we can break above the 1.09 level, then we could get something going. However, if we were to break down below the 1.08 level on a daily close, then it’s likely that the market could go down to the 1.07 level. The 1.07 level has been important more than once, and therefore it’s likely to offer support on any type of breakdown from here. If we break down below there, then the euro is probably in serious trouble.
All things being equal, I will probably wait to see what happens at the end of the week before I put any money to work, because quite frankly the euro is a great way to watch money grind back and forth and do nothing most of the time.
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