In summary, the Euro is likely to remain volatile in the short term, with the market between the 50-Day EMA and 200-Day EMA causing significant fluctuations.
- In Friday’s trading session, the EUR/USD saw a slight rally, but overall, the market remains noisy and volatile.
- This is likely due to the market being situated between the 50-Day EMA and the 200-Day EMA, which often causes significant fluctuations and choppy behavior.
- Algorithmic traders are likely going in both directions, contributing to the volatility. However, if the market were to break out of this range, it could result in a larger move.
It’s important to note that the market recently bounced back to the 50% Fibonacci level before falling again. The terminal rate is priced in the United States suggests a rate of around 6%, which could cause the Euro to lag due to the lower interest rate situation in the European Union.
If the market were to break below the 200-Day EMA, it could lead to a move to much lower pricing, potentially down to the 1.03 level, where the market had previously seen a bounce. Breaking down below that level could result in a move toward parity, which is a psychologically significant figure that the market pays close attention to. If the market were to break through parity, the Euro could significantly decline, although this is not expected to happen anytime soon.
On the other hand, if the market were to break above the 1.07 level, it could result in a move toward the 1.08 level. The 1.08 level is where massive selling pressure began, starting all the way back at the 1.10 level. While the market had previously tested the 50% Fibonacci level, it now appears to be ready to continue moving lower, coinciding with two large negative candlesticks that kicked off the correction.
In summary, the Euro is likely to remain volatile in the short term, with the market between the 50-Day EMA and 200-Day EMA causing significant fluctuations. While there is potential for the market to break out of this range, it’s important to keep an eye on key levels such as the 200-Day EMA and the parity level. Obviously, the Euro continues to be very choppy and noisy, so you need to be cautious with your position sizing. However, as there is so much negativity out there that it’s difficult to imagine that the US dollar is suddenly going to crumble. All things being equal, I do think it’s probably only a matter of time before we break out one direction or the other, but in the short term, it looks like we will continue to be frustrated in both directions.