- The Euro initially pulled back just a bit during the trading session on Wednesday, but keep in mind Wednesday will have been a slower day due to the fact that Juneteenth was going on in the United States.
- The holiday takes a lot of liquidity out of the market as far as North American trading is concerned as New York will have stepped away.
- This of course would cause a bit of a “blackhole” as far as liquidity is concerned.
A Lot of Back and Forth
When you look at the Euro, we are moving back and forth between 100 point ranges and in this case between 1.07 on the bottom and 1.08 on the top. However, from a longer term perspective, I think this year's range is going to be between 1.10 at the top and 1.05 at the bottom and therefore we will just simply bounce around.
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This is normal for the euro and therefore I think you have to look at it through a prism of shorter-term trades in 100-point increments. The European Central Bank has recently cut rates, so that of course has put a little bit of downward pressure on the euro, but we also have a war in Ukraine, which if it somehow spills over could be bad news for the European Union. Whether or not that happens remains to be seen, but the thought that its even a thing is something to think about.
The Federal Reserve of course has remained steadfast in its tight monetary policy and that has put downward pressure on the euro over the last several weeks as well, but it looks like we are at least trying to bounce from here. At this point, I believe that the 1.08 level is a little bit of a fulcrum for price and therefore could be considered to be fair value. Maybe that's where we're trying to get to, but right now I think we just meander behind the idea that we are just going from one big figure to the next.
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