(MENAFN- Daily Forex)
Tuesday was a rather quiet trading session in general, and the eur/usd was no different than most other financial instruments. After all, the Euro has recently been consolidating, but we did see a bit of negative pressure on Monday. The question now is whether the market is going to focus on“risk”, or if it's going to try to focus on“risk .”
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The European Central Bank has started talking about tightening and did make an interest rate hike previously. The European Union has a whole host of issues that the United States simply does not have, so it is going to be difficult to think that the European Union is a place that you want to be investing in right now. After all, there are concerns about heating this winter, as even though the Germans have“100% of reserves filled”, the reality is that reserve natural gas in Germany only accounts for 20% of what will be needed. This is going to be a very dangerous winter for the European Union overall.Noise Ahead
It is possible that Europe gets lucky, or perhaps the federal reserve decides to start loosening monetary policy to save the rest of the world, but right now it doesn't look like Jerome Howell is overly concerned about the rest of the world. The Federal Reserve could very well slow down its rate hiking, and that is somewhat expected. However, the Fed is also expected to stay tight for much longer, and therefore higher elevated interest rates should be a factor going forward. The 200-Day ema is sitting just above the 1.0350 level, and just below the 1.04 level. That's an area that I think is going to be difficult to get above, but if we could do that, then you would have to simply follow the market because at the end of the day it's the price that matters.
On the downside, I suspect that the 1.01 level would be an area that is targeted, possibly the 50-Day EMA which sits just above the parity level. Parity obviously has a certain amount of psychology attached to it, so I think it will cause a little bit of noisy behavior back and forth. If we break down below there, then obviously the Euro will be in serious trouble. Ultimately, this is a market that I think will be noisy, but I'm still looking for a selling opportunity.
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