In today’s live session, we focused on the fundamentals behind the recent rallies for the Euro and whether if these rallies are here to stay or if they are all smokescreens.
At the start of the week, many of the European pairs seemed to be indicating a next leg down to resume the overall downtrend. However, during the London session, we saw all of the European and Pound pairs soar to the upside. This move came after an article released by the Financial Times revealed ECB Christine Lagarde’s outlook on the economy. She believed that the recession the European Union was supposed to face may be rather mild. She also said the ECB can afford to take the ‘wait and see’ approach with the ongoing pandemic.
Now, will these gains and the uptrend last? We are not convinced just yet. If you recall, at the end of 2019 we made a bold prediction that EURUSD would reach a low of 1.05500. Price came close with a low of 1.06350 made back in March. The fundamental situation with the Euro has remained similar to as it was in December 2019, with the addition of an ongoing pandemic of course. Once the US Dollar has its bearings set, we feel a selloff should start in Q3. Our bearish bias will be removed if the price does make its way past 1.14500.
Currently, we are waiting for the markets to digest the wild moves that occurred earlier this morning. The DXY has been put in the spotlight as price action at and around 96.45 will be the indicator for where the majors and consequently the minors will go. As always, be safe and trade responsibly!
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