Euro Gets Hit to Kick Off the Week but Recovers

The Euro has initially gapped lower to kick off the week in reaction to the geopolitical and economic problems. That being said, the market has turned around to try to recapture the 1.12 level, but we are obviously in a major downtrend. Because of this, I think it is only a matter of time before we break down to a fresh, new low but it may not necessarily be something that we see happen as brutally as it looks at the open.

That being said, I am looking for signs of exhaustion that I can start selling, probably something that we will get on short-term charts more than anything else. Eventually, I anticipate that we could go looking towards 1.10 level, but it is obvious that the Euro is one of the choppier pairs that we follow, so do not be surprised at this is very noisy.

EUR/USD Video 01.03.22

I have no interest in buying the Euro until we break above the 50 day EMA and of course the interest rate differential between the United States and Germany tighten up. Right now, they are nowhere near each other, so with that in mind it is almost impossible to imagine a scenario where we need to get too cute with the market, especially as we see just how noisy everything could be in the fact that a huge portion of what we see is due to geopolitical noise, not necessarily anything to do with fundamentals. As the political noise is very difficult to guess ahead of time, you need to be cautious with your position size and of course your stop loss placement.

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