The US dollar blasted lower against most major currencies, including the Euro and British pound. The EURUSD pair traded above the 1.2750 level, and looks like might spike one more time. However, I think the pair might correct a bit lower from the current levels, and then trade higher again. So, we might look for a small risk sell position in the short term to gain advantage of this correction.
There is a major resistance area around the 1.2800-10 levels from where the Euro might correct lower in the short term. So, if the EURUSD pair spikes higher, tests the mentioned area, makes a stop and forms a bearish divergence, then we can jump into a sell trade. Remember, we need not to chase the EURUSD as it can continue surging higher. So, wait until all conditions to satisfy before getting in.
Initial target should be around the 1.2740 level, and final target could be around the 1.2710 levels. Stop should be placed above the last high created.
Reviewing recent events and trades
The FOMC meeting minutes turned out to be very bearish for the US dollar, as the Fed members mentioned in the minutes that the recent strength in the US dollar might hurt the dollar in terms of export and growth. The US dollar sellers got aggressive after the release, and took the greenback lower against the Euro, British pound, Kiwi and the Aussie dollar. The most important point to consider moving ahead is whether the dollar will continue to lose ground or is this a correction only? We need to only wait and see how the market shapes out.
Fundamental Outlook for the day
Today, the US initial jobless claims and the Bloomberg consumer confidence are the only major releases lined up during the NY session. I do not think there can be strong moves in the US dollar due to these events. So, the market sentiment would most likely be the driver in the short term. The ECB President Mario Draghi will be speaking later during the London session, which might cause swing moves in the Euro. We need to see whether the EURUSD pair can overtake the 1.2800 level or not. A break above would be a solid bullish call in the near term.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPCHF, AUDCAD, USDCAD, USDJPY, CADJPY, AUDJPY and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
