EUR/USD Forecast: Pair Bangs Around in the Same Rectangle

Christopher Lewis

This market will have to make a decision, but right now it looks as if we are simply trying to build up enough panic to drive through the parity level.

  • The EUR/USD currency pair has rallied on Thursday to show signs of continuation in the same range that we have been in.
  • The question now is whether or not we continue to see put downward pressure over the longer term, or if we see an attempt to turn things around.
  • I don’t think that we are anywhere near changing the trend, and the fact that Friday is the Non-Farm Payroll announcement has not escaped my attention.

It's All About the Federal Reserve

A lot of traders on Wall Street believe that the Federal Reserve is going to step away from monetary tightening much sooner than they had initially planned. Ultimately, this is a big game of “chicken”, as the Federal Reserve continues to say the same thing, while traders continue to pay no attention to them whatsoever. Sooner or later, somebody is going to have to blink.

On the other side of the Atlantic Ocean, we have the bog that is the European Union economy looking for a windshield. Because of this, the 1.01 level underneath could be a target, and at this point, if we were to break down below there it’s likely that the market could go to the parity level. The parity level course will attract a lot of attention, so if we were to break down below it, I think that would be a very negative turn of events, as it could open up and move down to the 0.90 level, perhaps even to the 0.96 level.

The 1.04 level seems to be a major resistance barrier, as it was a previous support level. “Market memory” comes into the picture in that area, so it’s worth paying close attention to. The market breaking above the 1.06 level would be a major trend change, but I don’t think that happens anytime soon. All things being equal, this is a market that I think given enough time will have to make a decision, but right now it looks as if we are simply trying to build up enough panic to drive through the parity level. If we cannot, we may have found the bottom, but I think that might be a bit of a stretch at this juncture, because it’s a market that features the European Union, which is one of the big disasters just waiting to happen.

EUR/USD chart

Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.

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.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.