The Euro has rallied initially during the trading session on Monday but gave back gains in order to show signs of less than enthusiastic momentum. At this point in time, the 50 day EMA is now sitting at about 1.1375, which is an area that has been significant resistance previously. All things being equal, this is a market that I think needs to get above that 50 day EMA on a daily close, which would show a bit of momentum coming back into the market. Currently, it does not look as if we have enough momentum, but with Jerome Powell speaking in front of the Senate, it is very likely that the US dollar could move around quite a bit during the day.
EUR/USD Video 12.01.22
To the downside, the 1.1250 has been supportive, and if we break down below there, then we will test the 1.1225 level underneath, which is the gateway to much lower pricing. If we break down below that level, then I think the bottom falls out and we go much lower. This would obviously be a very bullish move for the US dollar, and you would more than likely see the greenback rallying against almost everything out there, not just the Euro.
At the moment, this looks a lot like consolidation to me, which is the typical behavior for this pair, so there is not a whole lot here that is going on that is completely out of the norm. I believe that for the short term, a lot of traders will look to trade this back and forth, but I would not put a big position on because of Chairman Powell speaking and of course eventually we have to make a move based upon the bond markets.
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