- You see we initially made a rally to break above 1.04 only to turn around and show signs of weakness again.
- It’s ridiculous to think that the euro will suddenly turn things around for no reason at all.
- Just because the euro is cheap doesn’t mean it has to turn around. In fact, cheap things tend to get cheaper.
Now there will come a point in time when we turn around, but right now there is no fundamental reason to do so. The European economy is very weak, and at the same time we have an American economy that is very strong and inflation in America is stronger than most people would think.
So, with that being the case, I think you have a situation where the US dollar continues to beat everything it can, and the euro is one of the particularly weakest currencies as far as major currencies go. I believe this is the “epicenter” of all things Forex at the moment, as it usually is.
Parity is likely
I think we’ll get to parity eventually, but we’ve got business numbers on Friday, so there could be a little noise here and there this week, just to see things continue to the upside. If we did rally, I’d look for the 1.05 level, the 50-day EMA, and the 1.06 level for signs of exhaustion that I might start shorting again, because frankly, this is a pair that I want to be aggressively moderate on when I get the chance to pick up cheap dollars. That’s a warning.
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