Impulsive Moves Against EUR/USD as it Drop

If the world starts to see slowing economic behavior, it naturally brings a run toward the greenback, as money flows into the treasury market.

• The EUR/USD bounced a bit during the trading session on Monday as we continue to see the 50-Day EMA influence the market.
• Because of this, it’s likely that we continue to see more of the choppiness between the Euro and the US dollar, especially as both central banks look to be somewhat hawkish now.
• Despite this, most traders are betting that the Federal Reserve is going to blank rather soon, and it’s given the Euro bit of a reprieve.

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European Central Bank president Christine Lagarde has recently suggested that there are several interest rate hikes ahead, but at the end of the day, the European economy is a bug looking for a windshield. Furthermore, one of the big which Reeves has been that winter has been rather mild, and that has alleviated the issues with natural gas. Nonetheless, it is probably only a matter of time before the southern region starts with yield issues. The bonded situation in European Union is not truly changed in the last 14 years, and it’s hard to believe that countries such as Spain or Greece will change monetary policy anytime soon.

Looking for Signs of Exhaustion

If the world starts to see slowing economic behavior, it naturally brings a run toward the greenback, as money flows into the treasury market. The safety trade will come into Vogue, as we will see the Euro pay the price. As things stand right now, there has been an impulsive move against the Euro as of late, dropping 300 pips in a short amount of time. If we can break down below the 50-Day EMA, then it’s likely that we could go down to the 200-Day EMA near the 1.05 level. I suspect this is probably what’s going to happen, so I’ll be looking for signs of exhaustion to start shorting like we saw last Thursday.

Ultimately, I fully anticipate that these 2 currencies will go back to parity sometime in the next few months. This will be especially true if CPI and other inflationary numbers in the United States continue to be stubborn. Now it’s just a matter of whether Wall Street will believe that the Federal Reserve is going to keep monetary policy type. This is a monster that the Fed has enabled, but now that Federal Reserve governors can no longer day trade the stock market, they don’t have a personal interest in trying to lift Wall Street.