The EUR/USD currency pair initially rallied Wednesday but gave back gains rather quickly as the area above the 1.02 level offered too much resistance. Because of this, I think the market is likely to eventually fall toward the parity level again, as it is going to be like a magnet for price. After all, it causes a lot of headlines and therefore a lot of people will be paying attention to it.
Furthermore, the United States dollar is like a wrecking ball against almost everything and needs to be paid close attention to. If the US dollar strengthens, it’s almost always going to be that the euro has to fall. After all, the euro is considered to be the “anti-dollar”, so it makes quite a bit of sense that we would see this market fall. The 1.02 level was the first area of resistance, and it seems like we have failed from there. Even if we were to break above there, it’s possible that we could see the market go looking to reach the 1.04 level, but that seems to be off the table for the short term.
The 50-Day EMA is sitting just above the 1.04 level and dropping, so I think it’s only a matter of time before we would see that indicator come into the picture as well. Ultimately, I think this is a market where you will continue to see plenty of negativity, and therefore it’s likely that we will see plenty of noise as well. Ultimately, a lot of this will come down to interest rates in America and whether or not they continue to rise. At this point, it certainly looks as if that could happen, and therefore you have to pay close attention.
The parity level underneath being broken on a daily close would be a huge turn of events, perhaps adding more negativity to the market, and sending the euro much lower. Ultimately, I think we continue to fade short-term rallies, and the last couple of days certainly have given us a bit of real estate to cover to the downside. The overall attitude of the market has not changed, although the last couple of days have certainly scared some of the short-sellers. As I had been saying a couple of days in a row, it was only a matter of time.
Ready to trade our daily Forex forecast? Here’s a list of some of the best Forex trading platforms to check out.