The EUR/USD has continued to display a solid bullish trend. Yesterday’s price action broke important resistance levels and the 1.18000 juncture was touched for the first time since September 2018. The US Federal Reserve surprised no one yesterday when they kept their zero rate interest policy in place, but it was the tone from the US central bank which created more weakness for the US Dollar. The Federal Reserve said it will continue to do what it takes to try and stabilize the US financially and that the US economy remains challenged by the impact of the coronavirus.
The EUR/USD should attract the interest of many speculators. The bullish trend of the EUR/USD since the middle of March has been relentless. Yes, there have been moments when reversals have occurred and the US Dollar has shown the ability to create selling of the EUR/USD, but these have been temporary. The trajectory of the EUR/USD appears to be strong and this track may continue into the US election season.
Traders do need to use risk management, they do need to protect themselves against sudden selling spurts of the EUR/USD. After yesterday’s burst upwards in buying, a strong reversal did take place and as the forex market reacted to what could be described as over exuberance within forex for the Single Currency. This forex pair has actually been volatile and leverage has to be considered carefully when making decisions to trade the EUR/USD.
Speculators should also ask themselves what could suddenly change this emerging trend and stop the weakness of the US Dollar. If coronavirus were to spike again in Europe and force the European Union to be proactive regarding further stimulus for the continent this would certainly have an effect on the Euro. But would it be negative at this point, maybe not. Coronavirus and its infection outbreaks remain troubling for all nations, but the perception continues to be that the European Union and its nations have managed to handle the crisis better than the US and may be past the worse aspects of the pandemic. This is a huge wildcard that must be considered.
Speculators should keep their eyes on the trends in the forex market. The EUR/USD has enjoyed a bullish trend for an extended period of time. Traders should consider buying the EUR/USD on pullbacks that test short term support levels while looking for reversals higher. The path is clear for the Single Currency to continue its momentum upwards against the Greenback.
EUR/USD Short Term Outlook:
Current Resistance: 1.17900
Current Support: 1.174500
High Target: 1.182500
Low Target: 1.17200
