EUR/USD forecast for the week of February 15, 2016, Technical Analysis

The EUR/USD pair broke higher during the course of the week but gave back about half of the gains. Most of this was in reaction to Janet Yellen suggesting in front of Congress that the Federal Reserve was not going to be able to raise interest rates anytime soon. Because of this, the Euro gained against the US dollar but in the end and looks as if the market has more than enough resistance above to continue to fight. Ultimately though, we do believe that this market will go to the 1.15 level and we look at the 1.1050 level as supportive. So this pullback could be an opportunity to try to build up enough momentum to finally go higher again.

That being said, there is speculation that the European Central Bank could do what it can to jawbone down the value of the Euro, so expect the ECB to fire back in what is starting to become a very obvious currency war. Traders will have to deal with headlines, but ultimately it appears that the Federal Reserve will more than likely do what it can to bring this market down while the European Central Bank will do the opposite. That should lend itself to a choppy yet slightly bullish market going forward. Ultimately, it’s going to be difficult for longer-term traders to hang on to trade for any real length of time, but a couple of candles, in other words a couple of weeks, could be the average length of the longer-term traders move.

If we do break down below the 1.1050 level, the market will probably try to reach down to the 1.08 level. On the other hand, if we break above the 1.15 level, this market would be completely broken out and I believe at that point in time the market should then reach towards the 1.22 handle. That of course would be very bullish, but it would take a complete capitulation of the hopes of the Federal Reserve raising interest rates and the European Central Bank suggesting that they will not do anything to liquefy the markets.