The Euro rose a bit in early trading on Monday, as the EU would be mainly closed for Easter Monday. Interest rates in the USA continue to be one of the biggest drivers of action.
EUR/USD
The Euro rallied a bit early in the trading session on Monday, but it is probably worth noting that it was Easter Monday in the European Union and that of course will have a certain influence on liquidity. So, I wouldn't read too much into the early part of the day, but I would point out that unfortunately we are in a situation where we are still moving on the latest headlines and this of course can continue to be a very difficult world in which to live.
I do think that we are likely to test the 200-day EMA again and in fact almost did during Asian trading and then perhaps the 1.16 level.
The Impact of Interest Rate Differentials
The 10-year yield in the United States continues to be a major factor with the 4.30% level being the line in the sand. If the dollar sees the 10-year yield well above there, it typically gets bid as the interest rate differential starts to favor the greenback so much. On the other hand, if we start to see the yield in America drop, then it makes the Euro more attractive. Both central banks are probably somewhat in a holding pattern, although it's pretty easy to see that the Federal Reserve is much more influential than the ECB around the world.
And of course this is partially a risk appetite question too. So, with that, I remain somewhat neutral in this market recognizing that there is going to be the occasional headline that causes chaos and in the short term I think the 1.15 level offers support with the 1.16 level above resistance. If we were to break down below 1.15 then I would aim for 1.14. I still favor the dollar although I think we're more or less in a state of balance.