Euro vs US Dollar Technical Analysis

The Euro fell initially during the early hours on Thursday but is in the process of trying to recapture the 1.11 level. If we can break above the 1.11 level, it’s possible that we could go look into the 1.1140 level, a move above that level could open up the Euro to reach towards the 1.12 level again. But ultimately, I think this is a situation where we continue to see a lot of volatility and I do think that it is worth noting that the Euro had recently broke above a major resistance barrier. And at this point in time, I think we have to ask questions about whether or not we can truly take off to the upside.

I think a lot of what we are about to see will be settled on Friday with the core PCE index numbers coming out of the United States, as it is a major indicator for the Federal Reserve to measure inflation. This of course would have a major impact on monetary policy, which most traders believe that the Federal Reserve is going to be cutting in September, but it may have been a situation where people got way ahead of themselves because in the Fed Fund’s futures markets, it’s looking like they expect 100 basis points of cuts between now and the end of the year.

That being said, if that does in fact happen, then it would be a situation where we would have the Federal Reserve panicking and that probably has money heading back into the US dollar due to the fact that the markets go looking into the treasury market for safety. So, whether or not that’s true remains to be seen, but right now it looks like we are in a situation where we are at least trying to go back to the upside.

But whether or not we have any momentum remains to be seen. If we fall from here at the 1.10 level would almost certainly be a major support level as the market has been going from one major level to another.

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