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The only thing I think you can count on is Wednesday being a very noisy and influential session.
- The EUR/USD currency pair has done very little during the trading session on Friday, as it looks like we are starting to run out of momentum.
- Another thing that’s worth mentioning is that the FOMC meeting is on Wednesday of next week, and this suggests that we are going to have some type of volatility reenter the picture.
- In other words, if there’s going to be a pullback of significance, that could be the catalyst.
Federal Reserve VS European Central Bank
After all, we ended up forming a bit of a small shooting star on the weekly chart, so it doesn’t exactly screen confidence. Furthermore, the ECB is expected to raise interest rates, but they are also expected to be done raising by May.
At this juncture, I don’t have any real interest in trying to get too cute with this market, but I do recognize that a pullback is probably more likely than not. I would anticipate that the 1.06 level will be greatly influential in determining where we go next. As long as we can stay above there, the Euro has a chance to continue rallying. However, if we were to give up the 1.06 level after some type of significant shock by Jerome Powell, that could signify a continuation of the longer-term downtrend.
Speaking of the longer-term downtrend, it’s probably worth noting that this shooting star that form for the week formed right at the 50% Fibonacci level from the breakdown near the 1.22 level. While I don’t read too much into that, I know a lot of people well and therefore it might be a bit of a self-fulfilling prophecy, who knows? The interest rates in America remain higher than the European Union, and I think they will stay higher for much longer than the European Union can hang onto. After all, the one thing that has truly help the Europeans has been the fact that it’s been a warmer than usual winter. Longer-term, Europe is a bug looking for a windshield.
That being said, if we do break above the recent highs then there’s not much standing between here in 1.10 above, and therefore you would have to assume that we would at least try to break through there. Anything above there really starts this market taken off yet again. The only thing I think you can count on is Wednesday being a very noisy and influential session.
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