The EUR/USD currency pair has been slightly positive during the trading session on Monday, but we still stay in the same noisy range that we have been in for the last week or two, as we continue to wait on the FOMC meeting on Wednesday. After all, most of the speculation that we see right now in the Forex market is based upon what the Federal Reserve may or may not do when it comes to monetary policy, and of course it has an outsized influence on what happens here.
The European Central Bank has to deal with inflation, so there is a high likelihood that they will continue to raise rates, but the futures markets have a couple of 50 basis point rate hikes between now and May, and then sees yields dropping in the European Union after that. Whether or not that’s the case rates to be seen, but it certainly puts a bit of a cap on the Euro in that scenario.
The US dollar has been beaten up rather hard during the last couple of months, and at this point we have to ask whether or not the pullback was enough? After all, we have hit the 50% Fibonacci retracement level, which is an area that a lot of people will pay close attention to.
EUR/USD Technical Outlook
- Alternatively, the market than is likely to see that area offer as resistance, but if we were to break above there is likely that the market could go to the 1.10 level.
- That being said, this is a market that tends to be very choppy, and now we have to wonder whether or not the global growth situation is going to be better or worse.
- I suspect it’s going to be worse, so I do think that eventually the US dollar recapture some of those losses.
Whether or not we hit the lows again is a completely different question, but I think a pullback is coming and I do believe that the Federal Reserve will release a statement and a press conference reiterating just how tight they want to be with monetary policy and for how long, which will more likely than not be longer than the EU. That being said, it comes down to what the price of the asset does, and therefore you will have to follow the market in either direction.
Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex trading brokers in the industry for you.