Between now and then, do not be surprised at all to see choppy volatility that continues to favor a “fade the rally” type of situation. Ultimately, I do favor the US dollar due to the interest rate differential and perhaps more importantly, the fact that there are a lot of geopolitical concerns at the moment. Beyond that, we also have had a lot of downward momentum over the last couple of months, so it all ties together for a bearish market.
On the upside, the 1.2350 level is a ceiling in the market, and the 50-Day EMA sits right around that area, offering a bit of a short-term ceiling. That’s an area where I think you would see a lot of resistance, and if we do rally toward that area, I am more than willing to start shorting this market again. It’s not until we break above that level that you start to have a serious discussion about a potential trend change.
I don’t see that happening anytime soon, but it is something that you need to keep in the back of your mind just in case. Ultimately, it looks like the US dollar will continue to be the favorite currency, at least from a macroeconomic and global standpoint. The market continues to see a lot of choppiness, but it still favors the downside over the longer term from what I can see.
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