The Euro has broken above the 1.15 handle, breaking to the upside, and showing signs of significant strength. I believe that the market breaking above the 1.15 level is a good sign that we could be going to the 1.18 handle above. However, we need to break above the top of the candle, showing signs of continued bullish pressure. At that point, I anticipate that the door will open to the trend changing completely. The 61.8% Fibonacci retracement level has offered support a couple of months ago, and since then we have formed a bit of a “rounded bottom”, which you can see much clearer at the daily time frame than the weekly. At this point, I anticipate that the US dollar is probably being punished for the Federal Reserve waffling on its “automatic” plans to raise interest rates.
EUR USD Forecast Video 14.01.19
Beyond that, the ECB is set to stop buying assets, meaning that we are looking at a bit of QT coming out of the European Union. If that’s the case, then it makes sense that we could grind higher. However, I think the main point here is that we are going to grind higher, not explode to the upside. If we can break above the 1.18 handle, then I think we could go much higher, perhaps the 1.25 level but that is quite a way down the road, and probably needs the Federal Reserve to explicitly suggests that they are not raising anymore.
This article was originally posted on FX Empire
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