The Euro has rallied a bit during the trading session on Wednesday to show signs of life after what was a horrible Tuesday. Because of this, it looks as if we are trying to find support in the middle of the previous consolidation phase, which does make a certain amount of sense even though we had sold off so drastically during the previous session. Keep in mind that yields in America continue to spike, and as they took off during the day on Tuesday, the US dollar strengthened against almost everything.
EUR/USD Video 20.01.22
All of that being said, we did not break down below the bottom of the consolidation area, so it does make a certain amount of sense that we would continue to see buyers coming back into the picture. If we can break back above the 50 day EMA that I would consider this to be a situation where support held, and we could go higher. Until then, I am a bit suspicious and cautious, and would have to watch the US dollar across the market in order to feel comfortable either buying or selling.
Nonetheless, this is a market that I think will have to make a bigger decision, probably based upon bond markets. After all, the German Bund managed to go positive as far as yields are concerned, which is something that we have not seen in a couple of years. This of course made the Euro a bit more attractive, but at this point I think the only thing you can count on is a ton of noisy behavior over the next couple of weeks as we try to sort things out.
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