The EUR/USD currency pair has broken down during the trading session on Tuesday as the volume has picked back up. Ultimately, this is a market that looks as if it is trying to figure out where we are going to try to go down to the moving averages underneath, with the 50-Day EMA getting very close to breaking above the 200-Day EMA, forming the so-called “golden cross.”
Jobs Number Coming Out on Friday Will Affect the Market
Friday has the jobs number coming out of the United States, opening up the possibility quite a bit of volume and volatility coming into the market, and therefore we could see quite a bit of movement as we try to figure out where to go next. It’s worth noting that the 1.06 level is an area where we have seen a lot of previous noise, so a breakdown from here would make a certain amount of sense. We have been going sideways for a couple of weeks, but the market has seen a little bit of hesitation as the volume just wasn’t there.
EUR/USD Predictions
- The size of the candlestick is rather negative, opening up the possibility of a further drop in this market.
- If we break down below those moving averages, then we could break down through 1.04 level, maybe down to the 1.01 level, maybe even parity given enough time.
- On the other hand, if we turn around and take out the upside, the 1.08 level could be targeted, opening up the possibility of a move to the 1.10 level.
The move up to that level would be very strong, as it would show a huge turnaround and momentum. The market has been very noisy over the last couple of months as well, but at this point it looks like this recovery has been just that - a recovery.
You could make an argument that we just formed a “micro double top”, so a lot of traders out there will be looking at this move as a potential signal. If the jobs number on Friday is stronger than anticipated, people will start the price in the idea of the Federal Reserve staying very tight, and therefore driving the value of the US dollar higher as American inflation should continue to be very influential. Furthermore, it looks like the European inflation numbers are starting to drift lower, so we may see a continuation of the move that we had earlier in the year.
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