- Another day, another choppy session for the euro against the US dollar.
- You can see that we did initially rally a bit during the Monday session to reach the 50-day EMA, but turned around to show signs of hesitation.
- The 50-day EMA is a psychologically important technical signal that a lot of people will be watching, and it is worth noting that market participants will be looking at this through the prism of a potential sideways market.
I don't really think you have a whole lot of momentum here one way or the other, but I would point out that perhaps we could see short-term rallies get faded near the 1.17 level. I also recognize that markets have been doing more of a pro-dollar move since the FOMC meeting than anything else, which is a bit of a surprise because I was told by everybody in the online community that the US dollar was going to fall apart.
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And you can see we've done pretty much nothing but strengthen since then.
Now the question is, will we bounce from here? Maybe. But keep in mind that the FOMC meeting this week, which will feature possibly a rate cut, but the real question is going to be, what do we do here as far as the press conference is concerned? Because that's probably the real story. And the press conference, of course, will be late on Wednesday, and traders will be looking for hints to ask them where we go from here.
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If they don't sound dovish enough, you will see the euro get absolutely hammered. It is worth noting that the central banks around the world have quite a bit of volatility in store for the market. We have, of course, the Bank of Canada, the Federal Reserve, the Bank of Japan, and the European Central Bank all presenting their latest interest rate decisions this week. So, I expect a lot of volatility anyways.
The fact that Monday didn't really have a lot in the way of news probably means it makes a lot of sense that we're just drifting. By the end of the week, we should have some answers as to where we are going, especially as the Fed and the ECB will both be out of the way. But as things stand right now, it is worth noting that the dollar has held up remarkably well.
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