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The Euro has been somewhat sideways during the course of the month of July, which makes a certain amount of sense considering that we have so much in the way of noise out there when it comes to the Middle East and the interest rate markets, and traders have no real idea how to react to this.
We are near the bottom of an overall range, with the 1.14 level being a large, round, psychologically significant figure and an area that previously had been resistance. The market memory at this level, of course, is something worth watching, and I'll be watching very closely to see whether or not we are going to see interest rates in America spike, sending the Euro lower.
The top of the range in the last month or so has been basically the 1.15 level. If we can break above the 1.1530 level, then it's possible we could reenter the consolidation that we've been in for roughly a year.
EUR/USD Navigating Middle East Risks and Fed Uncertainty
This is a pair that has to balance the idea of all of the noise coming out of the Middle East and the potential energy disruptions for the European Union, but at the same time has to guess as to where the Federal Reserve is going to be in a few months.
Ultimately, I think you have a situation where traders look at this through the prism of a market that quite frankly doesn't really know what to do. The Euro is typically very choppy anyway, and that should not be a surprise. This has been the pattern this past month, and this will more likely be the pattern in the short-term, but once we get some kind of conviction, this pair could move quickly.
We are hanging around the bottom of a significant support area and the bottom of a consolidation range. So that tends to lean to the downside, but we'll see. What you're looking for here really is an impulsive weekly candlestick to tell you which direction we're about to head.
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