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Euro Continues to Show Hesitation

the Euro is likely to continue to face downward pressure.

  • During Tuesday’s trading session, the EUR/USD exchange rate saw a slight decline, as the common currency continued to show some weakness.
  • The 1.106 level is an area that could potentially offer support, with the 200-Day EMA located just below it.
  • It is also worth noting that the 200-Day EMA sits around a swing low, which is an important level given its psychological significance at the 1.05 mark.

While there may be buyers lurking underneath, it remains to be seen whether they will be able to keep the Euro higher. The European Union has a more precarious economic outlook compared to the United States, which could explain why the market is dropping.

However, it is also worth noting that there has been a significant trade betting on the Federal Reserve cutting back interest rates, although they have repeatedly denied this. The market will have to decide whether to believe the Federal Reserve’s messaging or to continue with its own narrative. Despite the Federal Reserve’s consistency in messaging, traders have shown consistency in their wishful thinking.

Looking ahead, if the market does bounce back from its current levels, the 1.08 level could provide resistance. Additionally, there was a significant sell-off a few weeks ago, which is unlikely to have occurred in a vacuum. As such, the Euro is likely to continue to face downward pressure.

Overall, the Euro remains in a precarious position, with buyers potentially lurking underneath. However, given the European Union’s economic outlook and the wishful thinking of traders, it remains to be seen whether the Euro will be able to find sustained support. Traders should keep a close eye on the 1.106 level and the 200-Day EMA, as well as the Federal Reserve’s messaging, as these factors are likely to have a significant impact on the Euro’s performance in the coming days and weeks. The Euro will also have to continue to pay close attention to the ECB interest-rate situation, as it looks like the central bank has decided that it will end its tightening cycle in May, and although the next hike will be 50 basis points, this is something that the market is already completely aware of, and therefore it has been priced into the charts. Nonetheless, the next thing that we will probably be paying attention to is the FOMC Meeting Minutes coming out, because they will give us an idea as to how aggressive the Fed remains.

EUR/USD chart

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