EUR/USD Daily Outlook- Oct. 25, 2013

Christopher Lewis

The EUR/USD pair rose during the session on Thursday, breaking above the 1.38 level for the first time in quite a while. The Euro continues to strengthen against the US dollar because of the Federal Reserve issues as far as tapering is concerned. As long as the employment numbers in the United States remain a relatively length, we can expect to see the US dollar fall over the longer term. On the other side of the Atlantic, you have the European Union which is exiting a recession, and looks relatively strong in comparison. The European Central Bank obviously is nowhere near loosening monetary policy at this point in time, and there are even some people that are suggesting that the ECB will tighten policy before the Federal Reserve has a chance to.

That being said, it is now blatantly obvious that the Federal Reserve will not be able tight monetary policy during 2013. With that being the case, there has to be a little bit of a repricing of that risk in the currency markets, and remember that the Euro is the "anti-dollar" if you will. Because of that, it almost always benefits from the woes of the US dollar.

1.40 is our next target

One of the greatest phenomenon in the Forex markets is the ability to pick off a 500 PIP move. It seems that the market wants to move to these larger big numbers, and as a result it makes perfect sense that we will head to the 1.40 level. Quite frankly, the 1.40 level has offered support and resistance on the longer-term charts in the past, this isn't exactly a stretch of imagination. I believe that pullbacks will more than likely bring in buyers trying to push the Euro up to that level, and as a result this should be a "buy on the dips" type of currency pair as the US dollar continues to take it on the chin.

Selling is not an option under any circumstances as far as I can tell. Even if we fell drastically, I still believe the "floor" in this market can be found down at the 1.35 handle. Any pullback should be looked at as a buying opportunity.

EURUSD Daily 102513

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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