- In my daily analysis of the EUR/USD pair, it looks like the euro is simply treading water, just below the crucial 1.05 level.
- This is not much of a surprise, considering that we have plunged so drastically to the downside that the market is almost certainly oversold at this point.
- This isn’t to say that I think we need to be buyers of this pair, just that I think a balance is probably more likely than not.
In fact, it’s probably worth noting that we initially tried to rally during the trading session on Monday but gave back those gains rather rapidly.
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Because of this, I think you have got a situation where traders are going to continue to see a lot of volatility in this pair, and that does make a certain amount of sense considering that the European Union has a whole host of issues to worry about. After all, we’ve got a situation where there is a hot war on the continent that is only getting worse, so that in and of itself probably makes some traders a little bit cautious about being involved in the European Union.
US Elections
The US elections have been like a shot in the arm for the US dollar and US equities overall. I think that continues to be the case, but it’s also worth noting that the market is paying close attention to the interest rate situation in the United States, as they have been rising, despite the fact that the Federal Reserve has been cutting. With this being the case, think you get a situation where traders will continue to look at this through the interest rate differential argument, but then again you also have to keep in mind that the US is more likely to be business friendly than the European Union now that Donald Trump is taking over.
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