The Euro has tested the 50 Day EMA yet again during the trading session on Wednesday, just as it did during the Tuesday session. It does look like the Euro is trying to break higher, but it happens to be in the midst of a major resistance barrier. This resistance barrier extends from the 1.11 handle to the 1.12 handle. With the 50 Day EMA being right in the middle of all of this, it certainly makes this area even more formidable.
However, the Euro is hanging onto the gains quite nicely, so it will be interesting to see how this plays out. If we were to break down below the lows of the trading session on Wednesday, that opens up a move down to the 1.10 level. That being said, the market is likely to see a lot of trouble in this area, so keep that in mind. Ultimately, if we were to break down below the lows of the Wednesday session, then I think we pile on and start breaking down. Keep in mind that the pair has been in a downtrend for quite some time, and even though this has been a nice rally, the reality is that the longer-term trend has not changed.
That being said, if we were to break above the 1.12 handle, then it allows the Euro to go looking towards the 200 Day EMA, which is currently sitting at the 1.1432 handle. Because of this, I do believe that even if we break to the upside, the Euro would have a lot of work to do in order to attract the kind of inflow that would be necessary to change the overall trend.
Beyond that, we also have to worry about the risk appetite around the world, which is a fleeting thing, to say the least. There seems to be this hope that central banks will save everyone, most notably the Federal Reserve. While the bond market has priced in several interest-rate hikes, some traders, specifically Wall Street traders, believe that the Fed will back away. One thing is for certain, you can hardly blame them based on the poor behavior of the Federal Reserve or the last 13 years. However, this is a market that still struggles due to inflation, poor economic performance, and the war in Ukraine.