Euro Attempts to Break Down

The Euro has struggled during most of the session on Monday to break down below the 1.11 handle. Breaking through that level opens up the possibility of a move towards the 1.10 level, which of course is a large, round, psychologically significant figure. At that level, I would anticipate that there will be a lot of people looking to get involved to find value and others that would be taking profits on the short side.

EUR/USD Video 03.03.22

On the upside, the market will have the 1.12 level as resistance. If we can break above there on a daily close, that would be a very positive sign for the Euro and could kick-off a potential relief rally. At that point, I will have to reevaluate the entire situation. That being said, it does not look like something that is being threatened in the short term, so therefore I like the idea of simply waiting for a setup on some type of bounce and signs of exhaustion.

I do think that the Euro will be very noisy and choppy, to say the least, as the European Union has a whole litany of individual issues that it has to deal with. We have a slowing economy in Europe, as the rate of change is most certainly dropping. We have inflation in Germany, and then of course there is a shooting war in Ukraine, which of course is on the doorstep of the European Union itself. Looking at this chart, you also need to be aware of the fact that the interest rate differential between the United States and Europe is as big as it has been in recent years, so therefore I still favor the greenback.

For a look at all of today’s economic events, check out our economic calendar.