EUR/USD Price Forecast – Euro show signs of strength again on WednesdayThe Euro rallied during the day on Wednesday, breaking through the 1.15 level again, showing that there is a certain amount of underlying demand for the common currency. Beyond that, it is more of a “risk on” move, as the Americans came in and picked it up.
Quite frankly, a scenario that we have seen recently is that the European sell everything they can, and the North Americans pick it up later in the day. That has been the case in the currency markets, a lease when it comes to riskier currencies. Beyond that, it is also been the case in the S&P 500 futures market, and some precious metals markets. I believe that continues to be the case as Europeans worry about the Brexit, and of course the debt situation in Italy. That has a lot of people nervous, but at this point I think the Americans are simply focusing on their own economy.
You can take advantage of this at roughly 9 AM New York time every day lately, picking up value on oversold conditions. Obviously, this will change eventually, but right now it seems to be a relatively reliable trade. I think that the EUR/USD pair is close to forming a longer-term bottom, as we are where significant support and resistance has been found over the last year. There is a significant amount of resistance above at the 1.18 level, and I think that would be the target for buyers. Ultimately, this is a market that I feel will continue to be very noisy, but in the end I think it makes sense that we continue to find buyers underneath. If we were to break down below the 1.14 level, that could unwind this pair rather drastically but I don’t see that happening right now.