- The Euro rallied significantly during the course of the trading session on Friday as the 1.08 level continues to offer plenty of interest in this market.
- It has been well supported over the last 48 hours, just as it had been significant resistance multiple times during the previous couple of weeks.
- With this being the case, the market looks as if it is going to try to go to the top of the short-term range, which is closer to the 1.09 level.
The euro is going to be an interesting currency to pay close attention to due to the fact that the European Central Bank could very well start cutting this summer, and if that’s going to be the case it’ll be interesting to see what happens with the euro. The US dollar on the other hand has the Federal Reserve that is likely to stay tight for the short-term, and that means that the market could eventually favor the US dollar, but in the interim, it looks like we are going to continue to see a lot of choppy behavior, meaning that it is relegated to short-term trading at best.
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Position Sizing
I think the position sizing in this pair is crucial, because if and when we finally do break out or for that matter, break down, this is a market that I think could really rip in one direction or another. That being said, I don’t see a catalyst for this quite yet, and therefore you need to be cautious because it could be a sudden geopolitical event. For example, if there is a lot of fear out there suddenly, the US dollar could suddenly become extraordinarily strong, crushing the euro in its path.
On the other hand, if we get a sudden “risk on rally”, we could send the euro truly take off. In the short term, I believe you are just simply kicking this market back and forth between the 1.08 level in the bottom, and the 1.09 level on the top of the current range.
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