Euro Gives Up Early Gains

The Euro initially rallied a bit during the course of the trading session on Monday but gave back gains to show signs of exhaustion. That being said, the market looks as if it is still struggling with the idea of recapturing the 1.10 level, and of course, we have a lot out there working against the Euro in general. Keep in mind that the Euro has to worry about the war in Ukraine, and the fact that the Federal Reserve has a meeting this week that should produce interest rate hikes.

EUR/USD Video 15.03.22

The interest rate situation should continue to favor the US dollar, but we will have to wait and see whether or not the Federal Reserve is going to continue to sound hawkish after the announcement. There are a lot of questions as to whether or not the Federal Reserve can remain as hawkish as they have been, as we are starting to see concerns about the supply chain again as well as the Shenzhen ports are now closed. All things being equal, a lot of traders are betting that the Federal Reserve cannot get overly aggressive in this type of environment, but at the same time there are a lot of questions as to whether or not the Federal Reserve cannot hike aggressively in this highly inflationary environment.

Because of this, I would anticipate a lot of noisy behavior, but I still favor the downside as the US dollar is used as a safe haven, something that is almost certainly preferred by traders in this type of environment. It is not until we break above the 1.11 level that you would have to take recovery seriously.

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