- During the trading session on Wednesday, we have seen a massive move in the euro against the US dollar, as it looks like the United States could possibly be heading toward a recession.
- The fact that Europe is coming out of one and the United States might be going into one obviously makes interest rate differential a lot less impressive than it once was.
With this being the case, it’s also interesting to note that recently we had all thought that the Euro was going to go to parity, which almost any time you hear that it does signify that perhaps there is some type of overabundance of bullish or bearish behavior. Nonetheless, this is a market that you don’t really want to be chasing at this point, because it has gained 300 pips in just 2 days, which is very rare for the euro, which is normally one of your more boring currency pairs.
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Technical Analysis
The technical analysis for this EUR/USD pair has shifted quite dramatically, and we are now technically in an uptrend. If we can stay above the 200 Day EMA, that would obviously be a very bullish sign, and that could have this market looking to the 1.10 level. However, it’s also worth noting that the 1.10 level is an area that might be difficult to get above, and if you are not already in this trade to the upside, what you are hoping for is some type of pullback and a bounce that you can take advantage of.
I would anticipate that we will see a lot of volatility in this market right along with everything else, so you do have to be cautious with that. However, I also recognize that the market has decidedly shifted in one direction, and I do want to be part of that, but I don’t necessarily want to pay high levels for the euro, which typically will slow back down. I use this as a gauge for the US dollar against most currencies anyway, as a proxy for the US Dollar Index, which a lot of retail traders will also do.
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