• The Euro fell on Friday as interest rates in the United States continued to climb.

• That being said, interest rates in Germany have climbed as well, but really at this point I think a lot of traders are starting to get very nervous about this situation in the Middle East where traders have to wait for the next headline to determine whether or not there is any progress being made in the idea of finding peace.

  

I don’t see a lot of progress and sooner or later you have to worry about inflation via energy. Europe is in a much more vulnerable position than the United States is due to self-imposed green regulations and a moratorium on drilling of a lot of its resources. So, with that being the case, a lack of natural gas and crude oil is a toxic situation for Europe.

Vulnerability and support levels

If we bounce from here, which happens to be the 200-day EMA, it offers a short-term opportunity for those who might be willing to fade the selling pressure, but quite frankly I would prefer to see a bounce and signs of exhaustion that I can start shorting again.

I do believe that the EUR/USD pair is going to stay in the range it’s been in for some time and, for what it’s worth, the Euro is basically at the same price it was when it was introduced in 1990. In other words, with all the noise that we’ve had over the last couple of decades, it really hasn’t gone anywhere; it is worth the same as it was back then.

If we break down below the 200-day EMA we could go down to the 1.14 level, which I see as a massive support level, but I also recognize that the 1.15 level probably offers support as well. Rallies look suspicious to me at this point in time.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire