Euro Trying to Recover After the Massive Plunge Lower

The Euro has rallied a bit during the trading session on Tuesday to break above the 1.09 level rather early in the day. However, this is a market that has broken down significantly for a reason, and therefore it is likely that we will continue to see selling pressure over the longer term. Relief rallies are great opportunities to start shorting again, and at this point, I just do not see any reason why you would want to own the Euro.

EUR/USD Video 09.03.22

The interest rate differential between the two currencies is widening, and of course, there is a war on the doorsteps of the European Union. Beyond that, the markets will continue to pay close attention to the fact that the economic numbers in the European Union continue to disintegrate, and with that tightening Federal Reserve, it is just too obvious to think that this pair goes higher for the longer term. In fact, it would have to clear the 1.12 level before I was completely convinced.

Markets do not go in the same direction forever, and that is all we are seeing here. The market could very well find itself heading towards the 1.07 level, and it is worth noting that the Euro has already hit parity against the Swiss franc. There is the possibility that the Swiss National Bank intervenes in the EUR/CHF pair, which could cause a little bit of a reaction over in this market as well. If that does in fact happen, I will simply step out of the way and short the Euro against the dollar once things slow down.

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