The euro initially tried to rally a bit during the trading session here on Thursday but then fell apart as the 200-day EMA continues to be a major factor in determining the trend as per usual.
Watching this market, it's obvious to me that the rising rates in the United States continue to be a major factor in why the US dollar continues to be very strong and, of course, the euro suffers as a result.
With that being said, I believe you have to look at the EUR/USD pair through the prism of a market that eventually, I think, tries to go to the upside, but that would just be a situation where we are remaining in the overall consolidation range. As things stand right there, we are looking at a market that, in my estimation, is still trying to figure out whether or not the situation in the Middle East will make things better or worse.
Geopolitical Pressures and Federal Reserve Policy
The reason I say this is that you have a problem, in the sense that the interest rates continue to jump on the latest estimation, if you will, of the next move by the Iranians and the Americans. After all, it's all about the supply chain getting torn up, and Europe itself is particularly vulnerable to this as it imports most of its energy.
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If liquefied natural gas is going to continue to be a problem for the Europeans, or specifically the Germans, that is going to be a major problem for the European economy overall. On the other side, we have the Federal Reserve looking very likely to continue to remain tight. If that's going to be the case, then that will almost certainly put a beating on the euro and other currencies as well. As I look at this, I think rallies are to be faded, although, like I said, I do expect a bounce because I just don't know that we can hang on to any type of serious bullish sentiment.
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