- The euro initially rallied during the trading session on Friday, only to turn around and show signs of weakness.
- What I find interesting about this chart is that we could not hang out above the 1.06 level, and that is something worth paying attention to.
- This is an area that's been significant resistance more than once, and therefore I think you've got a situation where you have to pay attention to the fact that we couldn't stay above it.
With this, I think the 1.05 level could be targeted on a pullback as we continue to consolidate overall. The Federal Reserve is expected to cut rates by 25 basis points before it's all said and done. But really at this point, I don't think that's really what people care about. I think what they care about is the fact that the US economy continues to outperform the European economy.
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As long as that's the case, I think a lot of people are going to be looking at the euro with a little bit of disdain. The interest rates in America continue to rise despite the fact that the Federal Reserve has done everything it could to bring them back down. Remember, the bond markets make the decision not the Fed, truthfully, the Fed controls the short end of the curve, but that's an entirely different conversation at this point, I think we've got a situation where traders are going to continue to look at this through the prism of whether or not anything is changing.
Massive Support, But Will It Matter?
The Euro is hanging on to significant support, but what I find interesting is not only does this EUR/USD chart look like this, so does the Euro against the pound. So, this tells me this is a very specific problem with the Euro itself. So, I look at rallies as selling opportunities in this market that shows signs of exhaustion, just like we've seen. It's really not until we break above the 1.0750 level that I would become bullish.
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