Euro Finally Makes Its Move
Momentum is shifting to the upside, so it is possible that the trade continues to work to the upside, but for myself I will be trading other more volatile currencies.
The Euro has rallied significantly during the course of the trading session on Thursday to reach towards the 50 day EMA. By bouncing how we have, the market looks as if it is ready to make a bigger move to the upside. That being said, the Euro is almost always choppy to trade, and therefore I tend use it as a bit of an indicator. That being said, the market certainly has made its intentions known, and this suggests to me that the US dollar will continue to struggle.
What is interesting is that the Euro has been lagging many of the other currencies, and if you have been reading my analysis here at Daily Forex, you know that I said the Euro could very well break out. That being said, the market moving the way it has make me more conviction driven than before. I believe that the US dollar is going to have a hard time, and that we will see it across-the-board. This does make a lot of sense, because quite frankly inflation could very well get out of control.
The Euro could go as high as 1.18, but I think that there is much more momentum in other currency such as the Australian dollar and of course the New Zealand dollar. Commodities are going nuts, so there is no point in wasting your time with the European Union. That being said, it is an interesting indicator and therefore I do pay close attention to this market. If we were to break above the 1.18 handle, then it is likely that we could go much higher.
On the other hand, if we were to break down below the 1.15 handle, then the market could break down quite drastically. At that point, it is very likely that we would see the US dollar strengthen against everything, and then it would signify that we had a major regime change in the currency world, and probably far beyond it. Because of this, I think this is a very important chart to watch, even if you are not necessarily trading this market. It certainly looks as if the momentum is shifting to the upside, so it is possible that the trade continues to work to the upside, but for myself I will be trading other more volatile currencies.
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