EUR/USD Forecast Today 04/09: Key 1.10 Support Level (Video)
(MENAFN- Daily Forex)
The euro has fallen a bit against the US dollar during trading on Tuesday as Americans came back from the labor Day weekend. That being said, this is a market that got too far ahead of itself, so a little bit of a pullback probably makes quite a bit of sense. The 1.10 level underneath is a large round psychologically significant figure that I think a lot of people will be paying close attention to.
So I'd be interested to see how this pair behaves in that region. That's especially true considering that the 38.2% Fibonacci retracement level is there. And of course, we have the 50 day EMA racing towards that area as well. You should keep in mind that traders are now trying to price in a 100 basis point cut between now and the end of the year and a 225 basis point rate cut between now and the end of next year, that suggests that things are a lot worse than people thought. And while it does make the Euro more attractive in the short term, the reality is that if we see the US economy tumble quite drastically, like some people are trying to bet now, that will actually bring up demand for the US dollar as large firms in America will repatriate money.
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But of course, traders will jump into the treasury market as well, which obviously takes the US dollar to do so. On the other hand, if we get a little bit more of a risk on move, and there's nothing on this chart to suggest that we cannot get that, then a bounce is likely and traders will try to push this pair towards the 1.12 level again, which on longer term charts is a significant barrier.
If we were to break that to the upside, we could see the market really punish the US dollar. This could be a situation where this pair would determine the overall direction of the greenback in the Forex markets.
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