The EUR/USD pair fell during the trading session on Thursday, reaching down towards the 1.23 handle as I record this. The market does look as if it’s trying to form some type of support in that area, so a bounce could be coming. I still believe that the uptrend is intact, if we can stay above the 1.21 handle and more importantly, the daily uptrend line on the daily timeframe. I think given enough time, the market should continue to go higher, reaching towards the 1.24 handle above. Otherwise, we could drift back towards the 1.2250 level, an area that has shown signs of support recently as well. I prefer the upside, and I look at short-term dips as an opportunity to perhaps pick up a bit of value, but I would do so slowly as there are a lot of concerns around the world.
The US dollar is enjoying a bit more strength than people had been giving it recently as the Federal Reserve has suggested there will be 6 interest rate hikes over the next 2 years. Obviously, that’s good for the US dollar, but now the question comes down to what the ECB’s about to do next? They look like they are ready to start stepping away from using as well, and I believe that the market is trying to “front run” that announcement. If we were to break down below the 1.21 handle, that would be extraordinarily negative for this pair, and at that point in time would change everything as far as my analysis is concerned.
Written by FX Empire