Jobs could be a catalyst, but now I think it’s much clearer that the US dollar is still needed and wanted, and the recent pullback in the dollar could present some attractive opportunities. for those who believe in its longer term rally. EUR/USD is slightly lower in Thursday’s trade as we look to threaten the 1.05 level. Right now we should see some major support, but if we don’t see that play out, we’ll likely continue to decline. Remember that the ADP number came in much hotter than expected during Thursday’s session, leaving people worried about the Fed and what it will do next. Advertisement SEE FOR YOURSELF WHY EUR/USD IS THE MOST TRADABLE PAIR TRADE EUR/USD NOW image Frankly, the Fed is going out of its way to tell people that it will stay tight longer than the public expects. In fact, Wednesday’s FOMC meeting minutes specifically noted that no FOMC board members believe interest rates will be cut in 2023, although many on Wall Street believe it is headed that way. to be In any case, if the interest rate were to be cut, it would be due to a recession, which of course favors the US dollar anyway, as it is considered a safe haven asset. Waiting for the ECB’s reaction While European inflation is quite hot, the reality is that the economy has slowed enough that the central bank needs to do something, and therefore the European Central Bank can blink much faster than the Fed. The 50-day EMA is currently moving right next to the 200-day EMA indicator, preparing for a breakout. Although this is considered a bullish sign, I believe that if we break below these two moving averages, the floodgates will open and the Euro could return to parity. If we turn back and take out the 1.08 level, this would be a very bullish sign, opening the possibility of a move back to the 1.10 level. I don’t see that happening and to be honest it would take a huge effort. Jobs could be a catalyst, but now I think it’s much clearer that the US dollar is still needed and wanted, and the recent pullback in the dollar could present some attractive opportunities. for those who believe in its longer term rally.