The EUR/USD had an impressive performance in Thursday's trading session, surging skyward and setting its sights on the crucial 1.10 level. The European Union opted not to raise interest rates, but they are signaling that they still have a ways to go in addressing inflation concerns. This presents a stark contrast to the situation in the United States. This difference in approach could mark a significant shift in the market, and it's evident that the market is eager to push higher. The 1.10 level holds immense significance, being a big, round number that will capture the attention of many traders. If we manage to break above this level, it could entice even more buyers into the market.
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As we approach the holiday season, we need to be mindful of liquidity constraints in the market. Additionally, there's a possibility of some profit-taking occurring. In simple terms, there might be a temporary dip in prices, but it appears that the euro is poised to continue its ascent towards the end of the year and possibly well into the next year. While the European Central Bank (ECB) may eventually consider lowering interest rates, for now, it seems that the market has undergone a noticeable trend shift and remains firmly in bullish territory. Of course, this could change if there is a significant shift towards risk aversion that prompts investors to flock to the US dollar.
A Bullish Signal for the Euro's Ascent
- The recent crossover of the 50-Day Exponential Moving Average above the 200-Day EMA, often referred to as the "golden cross," has caught the attention of many traders and algorithmic trading systems.
- This signal is viewed positively and adds to the overall bullish sentiment.
- If we successfully breach the 1.10 level, the next target could be around 1.1250, a level of previous importance.
At the end of the day, the euro delivered a strong performance on Thursday, and appears to be on a solid upward trajectory. The 1.10 level is a pivotal point to monitor, and its breach could trigger further buying interest. While short-term fluctuations and considerations regarding profit-taking are possible, the prevailing momentum suggests a positive outlook with the potential for further gains in the days ahead.
Potential signal: While you could already be long of this market, a daily close above 1.10 opens up a move to the 1.1250 level. I would aim for 1.1220 and have a stop at the 1.09 level.
