Some thoughts about EUR/USD
Hello, dear traders.
Today I’m trying to examine EUR/USD and outline its near-term prospects.
First of all, let’s look at the daily chart. Euro has managed to catch hold of a 4-month support line. Traders, I mean mainly about the big banks, seem quite reluctant to sell. Surely there were some good figures from the euro area. Current account surplus, for instance, still shows that the region is enjoying an inflow of funds. Euro retraced 50% of the move down from $1.3890 to $1.3507 and this retracement level lies right at the $1.3700 handle.
My general view is that the uptrend’s turning to a sideways trend. Next week we’ll have the Fed meeting. The comments of the FOMC members have been hinting so far to further QE reductions. The expectations of the Fed’s move might make euro bulls hold their horses.
Still, I’m kind of worried the low NFP and the recent weaker data from the U.S. Will Bernanke deliver? I believe that there’s a serious reason to doubt that, so I wouldn’t put my money on tapering this month.
My bet is that EUR/USD is going to spend the next week roughly between $1.3560 and $1.3750. Initially some dip and then up, maybe in a kind of an inverse head-and-shoulders formation, though it will be a wild guess unless there’s a break above $1.3700. See you next week to discuss further developments.
Analyst at FBS
Chart. Daily EUR/USD