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Euro Bulls Have a Lot of Work Just Above


It’s best to look for signs of exhaustion to begin selling, and there is a lot of noise in the market about the interest rate differential.

  • The Euro rallied against the US dollar during the trading session on Tuesday, breaking above the 1.08 level, but starting to approach an area of serious resistance.
  • The market will continue to be very noisy, and it is going to be difficult to break above this area anytime soon.
  • The market will see resistance all the way to the 1.10 level, a large, round, psychologically significant figure that has caused quite a bit of selling previously.
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Looking at the chart, it’s best to look for signs of exhaustion to begin selling, but right now, it looks like the market is trying to find its footing and determine some type of short-term consolidation area. Any exhaustion that appears will likely be something that a lot of people will jump on. Keep in mind that the noise in the market will be about the interest rate differential, and there’s a huge debate going on as to whether or not the Federal Reserve and the European Central Bank can remain this hawkish going forward.

Despite the banking crisis, it’s worth noting that the Bank of England suggested earlier in the day that it was going to go ahead and fight inflation, not worry so much about the banks. If banking issues continue, it’s possible that we would see a run towards safety, and that would mean the US dollar would be desirable.

The 50-Day EMA is currently sitting just below the 1.07 level, so it’s very likely that we would see a certain amount of dynamic support returned to the market. Underneath there, we have the 1.06 level, followed by the 200-Day EMA which sits right around the crucial 1.05 handle, an area that would open up massive selling if we were to break down below it. In that environment, the US dollar would probably spike against most other currencies as well.

The Euro has rallied against the US dollar, but is approaching a significant area of resistance that will be difficult to break above. It’s best to look for signs of exhaustion to begin selling, and there is a lot of noise in the market about the interest rate differential. The 50-Day EMA is a dynamic support barrier that will likely return to the market. However, if we break down below the 1.05 handle, it would open up massive selling, and the US dollar would probably spike against most other currencies.

EUR/USD chart

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