The Euro has fallen to break down below the 200-day EMA on Tuesday as interest rates continue to be a major driver of where we go.
The US 10-year yield is now above 4.67%, which is extraordinarily high compared to recent years and with that being the case it makes sense that the US dollar will strengthen.
The Euro of course is suffering at the hands of the potential for a lack of energy in the European Union if the situation in the Middle East continues to be a problem.
By breaking below the 200-day EMA we have seen a decided negative shift in the EUR/USD market and it looks like we could go down to the 1.15 level, possibly even the 1.14 level.
Watching the Potential Ceiling
The market has previously been bouncing around in a range that is supported at the 1.14 level, so it does make sense that we might try to get down there. The 1.1850 level above is a significant barrier and something that we need to watch very closely as the potential ceiling.
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We're basically just breaking down below the fair value area if you will and as a result I think we've got a situation where the US dollar just continues to outwork everything else and that of course will include the Euro.
I'm not looking for a meltdown here, but I do believe that given enough time the Euro will reach to the bottom of this range unless something drastic happens where the Strait of Hormuz suddenly gets opened and even then, we've got some rocky road ahead of us.
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