- In my daily analysis of the EUR/USD pair, the first thing I see is that the euro is struggling against the US dollar yet again.
- It seems like every time this market tries to rally, the euro get squashed as the US dollar remains favored.
- This does make a certain amount of sense considering that the European Union economy is sputtering a bit, and the US economy continues to outperform.
- Just yesterday, we got the Manufacturing PMI numbers coming in better than anticipated.
For the rest of the week, we have to pay close attention to Services PMI numbers, and of course the Non-Farm Payroll announcement to come out on Friday. This could very well send the dollar flying, or it could cause mass confusion. You never really know what you get when it comes to these announcements, but the one thing that you can probably count on is that Friday will probably be fairly volatile.
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With all of this being said, I look at this as a market that is a bit of a proxy for the US dollar strength or weakness at any time, and therefore I think we’ve got a situation where we have to recognize the fact that the greenback is extraordinarily strong and may very well continue to be so. Even if you don’t necessarily want to trade this pair, gives you an idea of how the US dollar should behave against several other markets. This is especially true when it comes to emerging market currencies, which are particularly vulnerable to a major “risk off” attitude.
Uptrend Continues for the US Dollar
The uptrend for the US Dollar continues to be very strong, and while I do think that it’s going to be difficult to break the EUR/USD pair down, if we break down below the 1.0450 level, then it’s possible that we could go down to the 1.03 level. It would not surprise me at all to see the euro reach parity at this rate. On the other hand, if we turn around and break above the 1.06 level, then that could have this pair rallied toward the 1.0750 level, where the 50 Day EMA currently resides. Signs of exhaustion would almost certainly attract more selling in that region as well.
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