EUR/USD forecast for the week of March 10, 2014, Technical Analysis

The EUR/USD pair initially fell during the week, but as you can see broke out well above the 1.38 handle. The 1.39 level as far as we can tell is probably when you can start to count on the downtrend channel being broken to the upside. This channel is crucial as it has held in place since the beginning of the financial crisis years ago. With that, we could be looking at a brand-new move higher in the Euro, meaning that this pair could be entering a new bullish cycle that could last for quite some time. Granted, there will be pullbacks from time to time, but in the end we believe that those pullbacks will meet buyers every time that they appear.

The 1.38 level should now be supportive, and if we get below there we would then be concerned about any move higher. Using a shorter timeframe charts to enter the market might be the best way to go, at least as far as “value” is concerned. However, the market should continue to show strength overall as we could very easily find ourselves heading to the 1.50 level. While it sounds astronomically high to a lot of traders out there, it really wasn’t that long ago that we were in that general vicinity. This is just a few years ago.

The European Central Bank earlier this week made no mention of monetary easing, something that the markets had begun to price in. If they are not going to start with the monetary policy, they already have a head start on the Federal Reserve as the interest rates are higher in the European Union anyway. Even with the Federal Reserve tapering quantitative easing, the still have a long way to go before they catch up to the Europeans. It’s not that this can change, but quite frankly with the Europeans showing slightly better economic numbers, and the Americans doing the same, it’s only a matter time before both economies lift and that should keep the interest-rate differential at right about where it is now.