With the Memorial Day holiday over in the United States, and the bank holiday over in the United Kingdom, normal liquidity comes back to the forex markets. With that being said, Chris looks at the EUR/USD pair, as we continue to see quite a bit of volatility in the forex markets.
The EUR/USD forecast coming out today is done with the idea of the 1.10 level being a bit of a magnet for price, and a place where we will have to try and clean some type of intention of this market going even higher or lower. If we can break above the 1.1050 level, we are bullish and we believe that the market should then go to the 1.14 handle. On the other hand, if we can break down below the 1.09 level, this market should then head to the 1.06 handle next. Regardless, there is a lot of noise coming out of Europe at the moment, and with that we feel that this market will be very difficult to trade. Because of this, the EUR/USD forecast is one of the most difficult for us at the moment.
You also have to keep in mind that there are words coming out of Athens lately that suggest austerity isn’t a possibility. We believe this is nonsense because every time the Greeks flex their muscles, they very quickly back down from the European Union, mainly the Germans. After all, the market has seen this movie before: the Greeks bickering and complaining, trying to get some type of leverage on the rest of Europe, only to back down every time they are truly challenged. We believe this is just more noise, and quite frankly, isn’t even an issue.
However, there is the question of whether or not the Federal Reserve is going to tighten rates going forward, so there is quite a bit moving this particular currency pair at the moment. At the end of the day though, we believe it is simply a matter of which direction we break next as to where the next 400 pips or so comes from.
We continue to monitor this market going forward, and we also believe that it is only a matter of time before we make the move needed to get involved.