EUR/USD Forecast: Looks Overstretched for the Time Being
Markets cannot go up forever, so it’s worth noting that we are getting overstretched, and of course are getting close to the area from where the market plunged lower previously.
The Federal Reserve raised rates just 25 basis points on Wednesday, and despite that, there are concerns around the world about the banking system. If this continues to be the case, the US dollar is likely to be at a premium. The current area where the Euro stands had been so bearish previously that it’s safe to assume that there will be significant selling pressure.
If the Euro breaks down below the bottom of the candlestick for Thursday’s trading session, it’s probable that it could go down to the 1.08 level, which was previously a resistance area. However, if it rallies above the top of the range for Thursday’s session, it may try to threaten the 1.10 level, a large, round, psychologically significant figure that would attract a lot of attention. If it breaks above that level, it would kick off the next great leg higher.
At this point, there are many economic issues globally, and it’s probably only a matter of time before the US dollar regains its strength. It will be interesting to see how the market plays out going forward. Regardless, it’s not recommended to be a buyer all the way up here without seeing the market consolidate for a while, as chasing trading positions after a market has made a sharp move is risky.
Markets cannot go up forever, so it’s worth noting that we are getting overstretched, and of course are getting close to the area from where the market plunged lower previously. There are a lot of concerns globally, and that typically will bode well for the US dollar. The 1.10 level above is going to be difficult to overcome, but despite what I believe, if we break above the 1.10 level, then it’s time to simply follow the market and try not to front run anything. While I don’t necessarily think we are going to see a huge breakdown, the reality is that the market has reached a little too far into short of amount of time.
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