EUR/USD Price Forecast – Euro takes off to the upsideThe Euro initially gapped lower slightly during the kickoff on Monday but turned around to fill the gap and reach towards 1.16 level by the time the Americans took control.
The Euro initially gapped lower in a bit of a “risk off” move to kick off the week, but by the time the Americans came on board we had not only fill that gap, but we started to threaten the 1.16 level. If we can break above that handle, then the market is likely to go looking towards the next figure, the 1.17 handle. By doing so, that means that the market would probably even be able to go towards 1.18 level given enough time. We are back in the previous consolidation area, so I think at this point the 1.15 level will probably offer a bit of support.
The Euro of course has a lot of moving pieces right now, not the least of which will be the Italian budget issue but I think overall what we are starting to see is a bit of a relief rally at the very least, if not a return to the previous attitude of the currency pair. At this point, I think that buying the dips will probably work as well, as we have seen such a rejection of bearish pressure recently. Given enough time, I do think that we will see the market try to test the 1.18 level above. The alternate scenario would be some type of meltdown, but that needs a catalyst. If we did break down rather significantly like that, the 1.1450 level is massive in its support, so breaking down below there would be a horrible sign for the Euro going forward. That seems to be very unlikely to be right now, so I remain mildly bullish.