Euro sideways during the Wednesday session at major level

There is talk of a short squeeze when it comes to the US dollar by many pundits, and I think that is part of what we are seeing. This is especially true considering that interest rate expectations in the United States are rising, while recently the European Central Bank suggested that perhaps the interest rates would remain low for “an extended amount of time.” That of course has put bearish pressure on the EUR, as one would expect. If the jobs number on Friday comes out stronger than anticipated, this will only drive interest rates higher in America due to interest rate hike expectations. This obviously puts downward pressure on the pair, and I think that we would clear the 1.20 region and go much lower. At this point, I would anticipate a 1.18 handle relatively soon.

If we break from here, and go higher, it’s not until we break above the 1.2150 level that I would be convinced that we are going to go higher. I would say that the market is most likely going to find more selling pressure at this point though, because we have seen such a change in attitude over the last week or so. Once we get the jobs number out of the way, that will give us even more information in which to make our decision. It looks as if the summer could be good for the US dollar, and Friday may be the beginning of that.