- During my daily analysis of major currency pairs, the EUR/USD pair has pulled back just a bit to show signs of hesitation.
- This is not a huge surprise, considering that the euro has been struggling for some time now, and of course there is an entire plethora of reasons to think that the euro will continue to do so.
- After all, the European Union is struggling economically and has had a couple of governments fall recently. This is not exactly the stuff that confidence is made of.
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Technical Analysis
The technical analysis for the EUR/USD pair is absolutely dreadful. The only thing that the euro has going for it is the time of year. There is the possibility that there could be a huge, short covering rally, but quite frankly I’ll just look at that as an opportunity to start shorting this currency again. I suppose you can make an argument that the 1.03 level underneath is important as well, so that might also help levitate the euro. That being said, I think that any time you get a chance to pick up “cheap US dollars”, you need to be doing that. Interest rates in America continue to climb over the longer term, and quite frankly the United States is the only place people really want to be involved with at the moment as far as investing is concerned.
It is not until we break well above the 1.06 level that I would consider any rally in the euro something worth paying attention to. I have seen massive, short covering rallies during this season of the year more than once, but this is not something that you can plan on. This is something that happens behind the scenes and start stripping algorithms. As things stand right now, the best thing you can do is to simply wait for an opportunity to get short yet again, but not necessarily chase the EUR/USD pair all the way back down to the 1.03 level. Let it bounce, let it breathe. Trade accordingly.
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