- The euro rallied a bit against the US dollar during the trading session on Monday, but it does look like it is struggling to hang on to a certain portion of those gains.
- This is a market that I believe is in a major state of flux at the moment and therefore needs to figure out what it is going to be doing for the longer term before we can put significant money to work.
- After all, we have been sideways for a while, and despite the fact that we tried to break out a couple of weeks ago, the reality is that we just couldn’t hang onto those gains.
Trend Continues or Not?
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At this point, the only question that I’m interested in is whether or not the trend continues or whether or not it doesn’t. Sooner or later, we have to make a decision as to whether or not we are going to continue the uptrend, or if we are going to fall apart. After all, the market is certainly one that isn’t showing a lot of strength, despite the fact that the FOMC cut interest rates recently. In fact, after the press conference, the euro has fallen quite a bit, all things considered. I suspect this is because the Federal Reserve isn’t panicking, and therefore people were worried that they are not going to cut interest rates fast enough.
Interest rates in the United States have been rising as bonds have been selling off, so thereby it makes the United States dollar a bit more attractive. Underneath current trading, we have the 50 Day EMA, a trend line, and then finally the 1.16 level all offering support. This is an area that needs to hold for the euro, or we could see significant selling. If we were to turn around and break above the 1.18 level, then it’s possible that we could go looking at the 1.20 level, but this is not an overly bullish market at the moment. In fact, I think it’s very neutral and asks a lot of questions as to where we go next.
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