With both the ECB and the Fed sharing their two cents this week, you would think that we’ll see more volatility for EUR/USD. Are we looking at an extended downtrend for the euro?
Earlier this week Forex Gump pointed out a possible retracement play around the 1.1830 area. As you can see, it lines up with not only a falling trend line and top WATR resistance but also a 50% Fib on the 1-hour time frame.
I kept close tabs on the pair and got excited when it did hit the retracement area. Unfortunately, the ECB’s statement was just around the corner at the time and I didn’t want to get caught in a (trading) storm in case Draghi pulled a “Super Mario” and surprised markets with his statements.
The euro did end up spiking above tWATR, but it turned out to be a fakeout when the common currency eventually extended its downtrend. You see, traders weren’t that impressed that Draghi and his team STILL didn’t ease the pedal from the metal despite their upgraded economic forecasts.
Not all hope is lost for the bears, though. Stochastic is still near the overbought area, the falling trend line remains intact, and the 100 SMA remains below the 200 SMA. Do these point to an extended downtrend for the euro?
What do you think? Is there a catalyst that could push the dollar higher against the euro or pull the euro lower against the dollar?
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