- The Euro has shown itself to be pretty weak in the early part of the trading session on Wednesday but let us keep it in the back of our minds here that it is FOMC Wednesday.
- So, I think what you have here is a little bit of position squaring over the last couple of days.
- This is a market that I think given enough time, we will have to make a bigger decision.
We are peaking below the little support level about which I have been talking. So, it is interesting. And I find this a very interesting place to be right now. And the way I will trade this is I will look at the daily close. If the daily close is below the 1.15 level, even the 1.1450 level, then I am short. If we close above the 50 day EMA, then I am going to be a buyer. I do not know if I will buy the Euro.
What I might do is actually buy other currencies against a U S dollar that are a little stronger like the British pound. That being said, this looks like the market is starting to come to grips with the idea that maybe Jerome Powell is not looking to cut rates anytime soon. And the percentage of the fed funds futures markets are dropping.
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So, at one point in September, everybody thought that the Fed was going to cut rates and now it is down to about 65 % 66%, somewhere in that neighborhood. Ultimately, I think this is a market where given enough time, we'll have to make a bigger decision. And this could end up being a very nasty double top. And in fact, you could probably find another indicator worth watching.
Notice how at least the moving averages on the MACD are diverging to the downside as well. We also could look at the Relative Strength Index. And you can see that the strength is just falling off of a cliff. So, it will be interesting to see how this plays out. This will obviously have a lot more to do with Jerome Powell and how the market perceives what he has to say rather than indicators. But I do anticipate that we will have a decision by the end of the day.
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