he euro has seen a lot of selling pressure come in during the day on Thursday as the US bond market continues to sell off, driving yields much higher. As the 10-year yield is sitting near the 1.75% level, it makes the US dollar much more attractive in comparison to other currencies. With that in mind, it does make sense that we would see the market fall again, but we are still well within the range that we have been in for some time, so I am not quite ready to get overly aggressive.
The uptrend line sits just below, and I think most of the world is aware of this. If the 10-year note continues to see higher rates, it is likely that we will see this market break down through that uptrend line. If it does, that could be a serious unwind of the euro, perhaps sending it down to as low as 1.16 over the next several sessions. Ultimately, you could even make an argument for a bearish flag forming right on top of that trendline.
On the other hand, it is also possible that we will see yields calm down, and if they do, that will probably send this market back towards the overall range that we have been in. Because of this, I think that we are on the precipice of something rather interesting, be it an attempt to break down significantly, or perhaps even a move to the upside to try to take out the 1.20 level. One thing is for sure: there will probably be major fireworks ahead due to what we are seeing in the bond market.
We are also squeezing between the 50-day EMA and the 200-day EMA, so a lot of technical traders will keep that in mind as well. Because of this, I think you can expect a lot of choppy action during the day but again, if we break above the 1.20 level, then it is likely that we will see a move towards the 1.22 handle, which is the next major resistance barrier. On the other hand, if we break down below, the move could be rather rapid as it would almost certainly have something to do with interest rates spiking in America.
The uptrend line sits just below, and I think most of the world is aware of this. If the 10-year note continues to see higher rates, it is likely that we will see this market break down through that uptrend line. If it does, that could be a serious unwind of the euro, perhaps sending it down to as low as 1.16 over the next several sessions. Ultimately, you could even make an argument for a bearish flag forming right on top of that trendline.
On the other hand, it is also possible that we will see yields calm down, and if they do, that will probably send this market back towards the overall range that we have been in. Because of this, I think that we are on the precipice of something rather interesting, be it an attempt to break down significantly, or perhaps even a move to the upside to try to take out the 1.20 level. One thing is for sure: there will probably be major fireworks ahead due to what we are seeing in the bond market.
We are also squeezing between the 50-day EMA and the 200-day EMA, so a lot of technical traders will keep that in mind as well. Because of this, I think you can expect a lot of choppy action during the day but again, if we break above the 1.20 level, then it is likely that we will see a move towards the 1.22 handle, which is the next major resistance barrier. On the other hand, if we break down below, the move could be rather rapid as it would almost certainly have something to do with interest rates spiking in America.