Where is the EUR/USD headed north or south?
EUR/USD is moving south in increments
EUR/USD has been in a long-term downtrend as of May last year, when the ECB president Draghi announced that they would pursue a loose monetary policy since the recovery of the Eurozone was weak and the inflation was heading south. This pair was at 1.40 at that time but it reversed and started the downtrend, reaching 1.0450 in March this year. Then, the FED made a dovish statement during their meeting in April, pushing for rate hikes later in the year and the EUR/USD rallied to 1.1050 from 1.05 in a matter of hours. Since then, this pair has traded between 1.07 and 1.13 in the first two months until July, when it then entered another range between 1.10 and 1.15. It briefly broke above 1.15 in late August during the Chinese stock market crash but it quickly reversed back.
That was then; what about now? Well, about two weeks ago Draghi once again delivered a dovish speech announcing an increase of the QE programme and negative deposit rates. Today, I just saw comments from another ECB official saying that their monetary policy won´t be influenced by the FED, meaning that they will ease further, although the FED is planning to hike. The ECB definitely don´t want the Euro higher than 1.10 against the Buck. That´s one side of the coin for EUR/USD, while the other is across the Atlantic. The US economy is doing quite good (apart from the manufacturing sector) and the FED raised hopes of the investors on last week´s meeting about a rate hike in December. Since then, we have only opened sell forex signals in this pair, all of which have been successful but one. Today, the FED chairwoman Yellen will testify before the House Financial Services Committee at 15:00 GMT. If she sticks to the December rate hike, then the pair will have another tumble lower and probably break last week´s low at 1.0890s. We´re close now and if we´re fast enough to enter a trade we will open a short-term sell forex signal around 1.0950-60. For the long-term forex signals we will wait and see if the price reaches 1.1040-50, where we might be tempted to open a long-term sell forex signal.
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