Ultimately, this is a market that I think continues to see a lot of noisy behavior, and that makes quite a bit of sense as people were trying to figure out what the Federal Reserve is going to do.
- The EUR/USD has pulled back ever so slightly during the trading session on Tuesday but turned around to show signs of life as we are trying to form a bit of a hammer.
- Ultimately, this is a market that I think continues to see a lot of noisy behavior, and that makes quite a bit of sense as people were trying to figure out what the Federal Reserve is going to do.
- Furthermore, you should also keep in mind that the ECB is said to be hawkish, but at this point, a lot of the focus will be on Jerome Powell himself.
Furthermore, we also have to worry about the jobs number on Friday so a lot of different things are going on this weekend therefore people will be very back and forth. However, I also think that we’ve got a situation where this pair has been doing that for a while so I don’t see why that would change. The 1.09 level has offered a significant amount of resistance, so if we can break above that level, then it’s likely that we could go all the way to the 1.10 level without too many issues.
US Dollar Likely to Strengthen
Looking at this chart, you can also point out that the 50-Day EMA has broken above the 200-Day EMA, forming the so-called “golden cross” 2 weeks ago. A lot of longer-term traders really like that, but whether or not it is reliable remains to be seen. Once we get through the press conference on Wednesday, I think we have a better chance of understanding where this market is going to go. Obviously, this is a market that has been very bullish, so we need to see Jerome how truly shocked the market in order for markets to turn around.
I do think that there are a lot of economic headwinds coming down the road, and then typically offers the US dollar bit of strength. The markets have a lot to digest, not the least of which will be whether or not the economy globally is going to grow. This seems to be a lot of hope pinned on China, so they could come into the picture as well. The more risk appetite that’s out there, the more likely we are to see the Euro takeoff. That being said, if we break down below the 1.06 level, then the bottom could fall out.
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