- The Euro fell significantly during the early hours of Wednesday, breaking toward the 1.1725 level before finding a little bit of stabilization.
- This is an area that’s been important for support a couple of times recently, and therefore it’s not a huge surprise to see that we are at least struggling to drop below that level.
- Ultimately, the US dollar is considered to be a safety currency, and a lot of people might be looking at this chart for clues as to where other markets ended up going over the longer term, as the Euro is the most widely traded currency against the US dollar.
Ceiling Above?
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It looks as if there is a bit of a ceiling above, as although we did at one point break above the 1.19 level, the Federal Reserve press conference certainly put a damper on the idea of the US dollar collapsing, as it appears that the Federal Reserve is still somewhat “data dependent”, and if that’s the case, the interest rates in the United States will continue to be fairly robust, putting a little bit of a floor into the US dollar.
Another thing to keep in mind is that I am starting to hear all of the same nonsense again, about how the US dollar will lose its world’s reserve currency status, and that the US dollar is going to fall apart. Almost like clockwork, every time I hear this sentiment out there, you are getting closer to the bottom in the US dollar than anything else. Timing that is a bit difficult, but it certainly looks as if the US dollar is not dead quite yet, and if the situation in the United States is really that bad, the reality is that if the US economy drops, the rest of the world drops right along with it. That is one of the few correlations that you can count on over the longer term. This is a market that I think is setting up for shorting opportunity eventually, but as things stand right now, it’s going to remain somewhat neutral.
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