We continue to see plenty of selling opportunities every time we bounce, so I am focusing on short-term charts more than anything else.
The Euro initially tried to rally during the trading session on Monday but gave back gains to show signs of exhaustion again. At this point, the market breaks down below the hammer from a couple of days ago could open up more selling pressure, perhaps down to the 1.06 level.
Keep in mind that the Euro continues to suffer at the hands of significant pressure, but beyond that, there are a lot of negative influences on the Euro, due to the fact that the risk appetite in the European Union is difficult, to say the least, with the war in Ukraine causing a lot of headaches. Beyond that, you have to worry about whether or not the Russians are going to supply gas to the European Union, or if they have to pay exorbitant and ridiculous prices by importing LNG from the United States.
If we bounce from here, then it is likely that we will see plenty of selling pressure near the 1.0933 level where it has been a bit resistant previously. However, if we were to break above there then I think the market goes looking to reach the 1.10 level, and then perhaps the 50 Day EMA which sits just 40 pips above there. We have been in a downtrend for quite some time, so any rally at this point in time will more than likely find sellers willing to jump in and take advantage of “cheap dollars.”
The Federal Reserve continues to be very hawkish when it comes to the outlook for interest rates, then it is very likely that the US dollar will continue to beat up on the Euro, which is not going to see higher interest rates, lease not intentionally from the central bank as they have to worry about not only inflation but also a serious lack of growth. A lack of energy on the continent could cause major issues as well, I think you are starting to see part of that being weighed by the markets, and of course the possibility of a serious lack of economic growth as a result. In general, I think we continue to see plenty of selling opportunities every time we bounce, so I am focusing on short-term charts more than anything else. At this juncture, I do not have any interest in buying the Euro.