I look at the EUR/USD pair heading into the September 21 session. The September 21 session features a Federal Reserve interest rate hike, which is all but known at this point. However, there will be people looking for some type of bully statement “between the lines” of anything that Jerome Powell says. It never fails, there are morons out there that believe that the Federal Reserve is going to bail them out.
In this video, I’m taking a look at how I’m going to approach this market. I have no qualms about shorting the Euro at lower levels, but I’m hoping that some of the “hopium” creeps back into the market so I can start shorting at a better price. After all, one thing that a lot of people forget about is that they are trying to pick up “cheap US dollars” as it is a bit of a bargain.
The European Union has a mass on its hands, and quite frankly it’s not really clear how it’s going to get out of its financial situation. Inflation is going to continue to be an issue, and then of course the Russians are escalating the war in Ukraine by holding a referendum on annexing territory. It’ll be interesting to see how this plays out of the longer-term, but I suspect that none of it is going to end up being good for the EU. When you live in a relatively advanced economy, worried about energy is not something you typically do.
I believe at this point in time it’s simply a matter of “fading the rally”, as it has been for quite some time. Unless Jerome Powell explicitly changes his tune on Wednesday, there’s no real reason to believe that the Euro assembly going to rally for a significant amount of time. Perhaps people will start buying the pair because the “worst-case scenario” of a 100 basis point rate hike may not be realized, but that would be a short-term relief rally at best. In fact, I’d be surprised if it lasted more than a couple of minutes.
