Euro Gives Up Early Gains to Show Signs of Exhaustion Again

The Euro has rallied a bit during the course of the trading session on Friday, as we continue to see a lot of noisy behavior. Quite frankly, the euro got a little bit ahead of itself recently, so it will be interesting to see if this pullback is just that, a pullback or if it is something a little bit bigger? It is worth noting that we got near the 1.15 level which of course would offer a certain amount of psychology to the market as well, so at this point in time I do think that a pullback makes a certain amount of sense.

EUR/USD Video 17.01.22

What is interesting is that even though a pullback is probably necessary at this point, it does not necessarily mean that the bullish run is over. I look at the 50 day EMA as a bit of support, and as long as we can stay above there then this is just simply a nice little pullback. However, if we plunged below there then I believe at that point in time the Federal Reserve is essentially acting like a wrecking ball and causing a lot of headaches for traders in general. Because of this, I would be very cautious, but I do recognize that a short-term selling opportunity is probably presenting itself.

It is also worth noting that the 10 year note has been oversold and is trying to recover, so it will be interesting to see whether or not we can rally in that market. If we do, that requires dollars so it could very well put a little bit of pressure here as well. On the other hand, if we break above both the Thursday and Friday candlestick, that is obviously a very bullish sign.

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