Euro Gets Hammered After Hot CPI in America

The Euro initially tried to rally during the trading session on Thursday as the market was awaiting the inflation numbers coming out the United States. The Consumer Price Index came out hotter than anticipated, and therefore it looks as if the Federal Reserve is probably going to have to tighten much quicker than anticipated. This is obviously very US dollar strength just waiting to happen, and we are starting to see a little bit of a breakdown in the Euro as a result. What is interesting is that the market could be forming a large “double top” over the last couple of weeks, so selling does make a certain amount of sense.

EUR/USD Video 11.02.22

Furthermore, when you look at this market, you can see that the 50 day EMA sits just below, so that could be a little bit of a support level. All things been equal, the market is not melting down, so I have to admit that the reaction has been a little better than anticipated. That being said, the market is very likely to see a lot of noisy behavior, but I think with a little bit more of a negative tilt than anything else. With this, I think that we probably have to be a bit cautious, but I do think that the attitude of the market is about to start shifting a little bit negative at this point. Pay attention to every time the Federal Reserve officials speak, because now the market is going to parse every word they say going forward. If inflation is in fact getting out of control, the Federal Reserve is about to get very aggressive.

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