The euro is a bit negative on Thursday, as we continue to see the interest rate differential take center stage with bond markets racing at times.
The euro is slightly negative during the trading session on Thursday as we continue to see a lot of noisy trading. All things being equal, this is a situation where the 200-day EMA above is a significant resistance barrier that’s also backed up by the 1.16 level. The sellers have been very active here, but I also would point out the fact that the buyers have been involved as well near the 1.15 level.
Ultimately, this is a situation where a lot of traders will be pushing back and forth in the EUR/USD market as there are a lot of concerns in both economies as far as the energy markets are being strangled.
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Energy Market Constraints and Safety Currency Momentum
Ultimately, the interest rates in Germany and other major European economies continue to rise so that does put a little bit of a floor in the euro, but at the same time, the US interest rates continue to rise and there is a little bit of a swap favoring the US dollar. The US dollar is also considered to be a safety currency, so it makes a certain amount of sense that we would see the US dollar pick up a little bit of momentum occasionally.
If we can break down below the 1.15 level, then I think the euro goes looking to the 1.14 level. To the upside, the 1.16 level remains a difficult barrier that extends to the 1.1650 level where the 50-day EMA continues to offer resistance.
Ultimately, this is a pair that I think is stuck with short-term trading and back-and-forth range-bound movement. With that being the case, I think we have a scenario where you're fading short-term rallies overall, at least until the war ends.
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