The Euro initially tried to rally a bit during the trading session here on Thursday, but it continues to see overhead pressure.
This is interesting because we did have the ECB interest rate decision as well as a statement, and despite the fact that the Europeans did in fact raise interest rates by 25 basis points, but all things being equal, this is a market that I think continues to see a lot of questions about whether or not the market is going to continue to expect weakness out of Europe, and I think they do.
The reaction certainly was negative, especially considering that US interest rates dropped. You would think that would lead to higher pricing of the Euro, but it clearly hasn't. So, at this point in time, I think we are looking at this as a potential move to the 1.14 level underneath.
Potential Move to Key Support Levels
The 1.14 level underneath is an area that a lot of people will be watching very closely, as it was previous massive support. And if we were to break down below there, then it opens up the possibility of a move to the 1.12 level.
Top Regulated Brokers
Any rally at this point in time, I think, would struggle to have a bit of a barrier in the form of the 200-day EMA at the 1.1612 level. Breaking above that would be extraordinarily strong, but I just don't see that happening.
So, with that being said, I think this is a “fade the rally” market, and the last 4 days have clearly shown that to at least be true so far. I have a hard time with the idea of buying the Euro at the moment, at least against the US dollar.
Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe to check out.