I think we have to be cautious about trying to get long, but I think short-term selling opportunities will continue to present themselves in the meantime.
- The EUR/USD currency pair continues to trade in a tight range, as Friday saw more selling pressure.
- This was mainly in reaction to the jobs number in the United States coming out better than anticipated.
- The reaction was negative for the Euro as traders began to bet that the Federal Reserve will continue to tighten.
- This obviously is good for the US dollar, as the market will have to pay close attention to the interest rates and whether or not they continue to go higher.
Anticipating a Range Breakout
The 1.01 level underneath has offered quite a bit of support, while the 1.03 level above has offered resistance. I think that continues to be the situation here, as the market will continue to be very choppy. That being said, I think it’s probably only a matter of time before we see this market have to break out. If we were to break out of this range, that could give us a bit of a “heads up” as to where we’re going next. Breaking down below the bottom of this range opens up the possibility of a move down to the parity level, which has seen a lot of noise previously.
On the other hand, if we were to see the market break above the 1.03 level, then it’s possible that we could go to the 1.04 level, possibly even the 1.05 level. At this point, the market is likely to see a lot of selling pressure, but we need to have some type of catalyst to make the Euro suddenly spike. It seems very unlikely it’s going to happen anytime soon, so I think you should continue to see selling on short-term rallies, and at the first signs of exhaustion.
Sooner or later, we will have some type of bigger move, but right now it does not look like the pair is ready to do so. Regardless, we have been in a downtrend for quite some time so there’s no need to think that we are suddenly going to change. With this, I think we have to be cautious about trying to get long, but I think short-term selling opportunities will continue to present themselves in the meantime. Anything below the parity level on a daily close would be rather drastic for the Euro, sending the market much lower.
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