Is EUR/USD ready for another move lower? This one is for the short-term forex traders out there!
Now that price triggered my adjusted stop loss on my USD/JPY trade, I’m setting my sights on another dollar pair.
This time I’m looking at EUR/USD’s potential bounce from the 1.1375 area, which happens to hang around the previous week low (PWL), this week’s open price (WO), AND the 100 SMA on the 1-hour chart. Talk about a triple threat!
Fundamentally, I don’t see any reason why EUR/USD will see a reversal from its strong downtrend.
The pair found reprieve when China announced that it was holding another round of trade talks with the U.S. but it doesn’t look like the momentum has legs.
See, one of the things we learned this year is that talks won’t necessarily lead to understanding. Just take a look at the meetings held back in May and June!
Meanwhile, all eyes are on risks surrounding Italy’s markets.The combination of shaky political landscape, a possibly overambitious budget plan, local banks that are too exposed to risks, and threats of contagion from Tukrish markets make up for a toxic mix that could lead to a sovereign credit rating downgrade. Not good.
On the other side of the trade, the dollar continues to rake in pips from overall risk aversion and Fed tightening expectations.
Until we see some (positive!) progress over global trade issues and recent geopolitical skirmishes, it’s likely that the dollar will continue to dominate along with safe havens like the yen and franc.
For now, I’ll be looking to see if the 1.1380 levels are high enough for the bears to pounce. If EUR/USD does see continued selling, then I might jump in when the pair makes new lows.
How about you? Do you think EUR/USD still has enough room for more downside price action?
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