Euro Pierces Major Support Level

[ad_1]

If you are looking to buy the Euro you can take your time, as you should have plenty of it to spare.

The Euro initially tried to rally during the trading session on Thursday, but then fell rather hard to pierce the 1.08 level. This was a major breach of support, although we did recover a bit after that move. This tells me that there is still plenty of downward pressure on the Euro, and during the day we also learned that the EU considers paying for Russian natural gas in rubles as a breach of sanctions. Because of this, the energy question continues to be very difficult for Europe, and I think that might be something that we see in the currency markets.

Advertisement

Furthermore, the interest rate differential between Germany and the United States continues to widen, and therefore it will continue to favor the greenback. While the ECB has the added headache of having to deal with expensive energy, or perhaps even the possibility of very little energy, the Federal Reserve is extraordinarily tight and is looking to hike rates quite rapidly. With that being the case, it does make a lot of sense that the greenback will continue to overcome the Euro in strength.

The 50 Day EMA has broken below the 1.11 level and is sinking rapidly. I think you use that as the “ceiling in the market” on any type of significant bounce. I do not see that bounce happening, but of course, anything is possible. At this point, if we break down below the bottom of the candlestick from the Thursday session, it is likely that we could go looking to reach the 1.06 level underneath, which is an area where we had seen a lot of noisy behavior previously, therefore, I anticipate that a break down is going to be a slow and painful event.

At this point, I cannot see a legitimate reason to buy the Euro over the greenback, but if we were to break above the 1.12 level, I might consider it. Needless to say, as it is 400 points above, it is not something I am overly concerned about doing anytime soon. If we were to do that, it would more than likely be a trend change, which tends to be a longer-term event anyway. In other words, if you are looking to buy the Euro you can take your time, as you should have plenty of it to spare.

EUR/USD Chart

[ad_2]

Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading Forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using xMetaMarkets services, please acknowledge all of the risks associated with trading.

The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.

The information on this website is not directed to residents of certain jurisdictions such as United States, Canada, Iran, Cuba, France, and some other regions, and is not intended for distribution to, or use by, any person in any countries or jurisdictions where such distribution or use would be contrary to local law or regulation.

© 2018 - 2024 xMetaMarkets.com. All Rights Reserved.