During the month of August, the Euro has been rising against the US dollar, as most currencies have. However, there are a few things about the European Union that could make it a bit different than other regions.
EUR/USD
During the month of August, we've seen the Euro rally as the overall attitude of the US dollar has been fairly negative. That being said, this is a market that had bounced off of the 1.14 level, an area that was significant support going back over a year, and since we have rallied from there, it looks very much like a market that continues to see a range play out. This is typical for this pair, as it is so heavily traded, not only from speculation points of view, but necessary transactions as well.
Top Regulated Brokers
That being said, we are not at the top of the range, and that's closer to the 1.1850 level. That is a major ceiling, and if we were to break above there, it's a very bullish sign. But I don't know that the Euro has that ability unless, of course, we see the US dollar falling around the world. If that's the case, then it's likely that we will continue to see a lot of hesitation to simply break through.
Central Bank Policies and Geopolitical Risks
Ultimately, this is a market that will continue to pay close attention to the Federal Reserve and its monetary policy, but it's also worth noting that the European Central Bank is expected to raise rates by 25 basis points. But with this being the case, you also have to pay close attention to the energy situation in the Middle East, because quite frankly, Germany's very sensitive to this.
And if it looks like oil is not going to be flowing out of the Persian Gulf, that could be disastrous for Germany, as well as the natural gas fields in Qatar. If that gets cut off, it's going to increase the major input cost for Germany and, by extension, would cripple the European economy. The month of September could be crucial, but right now, as things stand, we're basically in the middle of a larger range. This means we are neutral, but there are a few things, mentioned previously, that could make this market move a bit more than we have seen over the last few weeks.
Ready to trade our monthly forecast? We’ve made a list of the best European brokers to trade with worth using