EUR/USD Forecast: Euro Gives Up Previous Gains

  The Euro initially tried to rally during the trading session on Thursday but gave back the gains to show signs of weakness. We are back below the 1.11 level, suggesting that we are ready to continue grinding lower as the overall trend has been so strong. Because of this, the market is likely to continue to find sellers on short-term rallies, just as we did over the last 24 hours.

  

  

EUR/USD

  The fact that we wiped out the previous session is a sign of rather significant negativity, and with the jobs report coming out during the day on Friday, it is very possible that we could see the US dollar move in this market rather rapidly. A breakdown below the lows of the trading session and a daily close below there as well would be reason enough for me to start shorting again, as the 50 Day EMA has offered significant resistance. At that point, the market more likely than not could go looking towards the 1.0850 level, an area we had bounced from previously.

  The alternate scenario is that we turn around and break above the crucial 1.12 handle, which is an area that has been important multiple times. Clearing that area opens up the possibility of the market looking towards the 200 Day EMA, although it is not something that I see as being very likely in the short term. However, if we do get shocking news out of the United States when it comes to employment, that could be the catalyst to get this thing moving to the upside.

  Interest rate differentials between the two economies continue to favor the United States, and therefore the US dollar. In that scenario, it is very likely that we continue to see more of a “sell the rallies” type of situation, especially on short-term charts. The downward trajectory of the market has been confirmed more than once, and I think that will more often than not be the case going forward.

  I believe at this point we have a market that is looking for some directionality, but the longer-term attitude most certainly has been negative. I do not see this changing anytime soon, and therefore it is more likely than not only going to be a choppy and noisy market, but most certainly a -1.

  

  

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