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Volatile Week Ahead Amid Central Bank Meet

Adding to the complexity, the 50-Day EMA is hovering just above, which could potentially act as another resistance level. 

  • The EUR/USD had a slight rally during Monday’s trading session, continuing to test a short-term range.
  • The currency pair seems to be encountering resistance at the 1.08 level, while the 1.07 level underneath provides some support, largely due to the influence of the 200-Day Exponential Moving Average.
  • An uptrend line further bolsters the support, suggesting a strong foundation.

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However, the upcoming week promises to be extraordinarily volatile for this pair. The Federal Reserve is scheduled to hold an interest rate meeting on Wednesday, followed by the European Central Bank’s meeting on Thursday. These back-to-back meetings are likely to bring a resolution to the current market choppiness.

Adding to the complexity, the 50-Day EMA is hovering just above, which could potentially act as another resistance level. The market is expected to remain relatively calm over the next two days, but the tranquility could be short-lived. The Federal Reserve meeting and subsequent statement are likely to trigger significant market activity.

Traders should also be aware that the market reaction on Wednesday could be counterbalanced by Thursday’s response. This means that the initial reaction might not accurately reflect the market’s direction.

Despite the uncertainty, the market is currently in an uptrend. Under normal circumstances, one might expect this trend to continue. However, the events of the next few days could rapidly alter the market dynamics. Therefore, caution is advised. Some traders might even find it prudent to avoid this pair until a clearer picture emerges post the central bank meetings.

If the market makes a move ahead of the announcements, it could be an attempt to “front run the central banks”. However, this strategy is fraught with difficulties and should be approached with caution. The euro trading pair will likely be the epicenter of most of the volatility for the next week or so.

At the end of the day, the upcoming week in euro trading is set to be a rollercoaster ride, with central bank meetings poised to significantly impact market dynamics. Traders are advised to navigate this period with caution and experience, keeping a close eye on market movements and potential shifts in trends. This market will be one of the more dangerous ones to be involved in this week, so please exercise caution when trying to put positions on in this environment.


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