- The euro initially fell hard against the US dollar, but then turned around to skyrocket after the preliminary GDP numbers in the United States came out at 0.2% instead of 0.3%.
- In fact, it was interesting to see that the US dollar started to give up gains a few hours before the announcement, almost like somebody knew it was coming out lower than anticipated.
- You saw this across the board, so questions will be asked about whether or not some information was leaked. When you watch Wall Street as of late, it seems like most of the information is getting leaked ahead of time, as the markets is starting to react in very odd ways.
Despite this, I still think there is a significant amount of resistance above, and it’s likely that fears of a recession or weakening economy probably will have people running back into the US dollar, because while interest rates will drop in the bond market, something that is desperately needed in America, there is the thought that if people are worried about global growth, then they will piling the US treasuries. They still offer a high rate of return, and I think that will still be something that people pay close attention to.
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Technical Analysis
The technical analysis for this market is a mess, as we have bounced from the 1.12 level, turning around to show signs of life as we have broken above the 1.13 level. All things being equal, this is a market that continues to be very noisy, but I think there is a massive amount of resistance near the 1.14 level, followed by the 1.15 level above. Ultimately, this is a market that needs to get above there to truly take off to the upside for a longer-term move. If we were to turn around a break down below the 50 Day EMA, then I think the US dollar starts to strengthen not only against the euro, but multiple other currencies as well.
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