EUR/USD Forecast Today 16 January Euro Simply Cannot Rally

(MENAFN- Daily Forex)

• Despite the fact that the day started out rather positively for the euro, the reality is that it simply cannot hang on to gains. The Consumer Price Index had a chance of helping the euro, as it came in at 0.23% instead of 0.3%.
• The market is likely to look at this, at the very least, as a good sign or a potential cooling off of the US dollar. However, we have a keep in mind that the Federal Reserve still has a long way to go before they start loosening monetary policy, while the European Central Bank looks absolutely feckless at this point in time, and there's almost no chance they would tighten monetary policy.

Technical Analysis

The technical analysis for this market is rather dire, and the candlestick on Wednesday will have done nothing to change that attitude. After all, the US dollar got hammered after the CPI number, but you can see that we have turned right back around to show weakness here. This is mainly due to the fact that the European Union is in a complete state of chaos as far as the economic situation is concerned. In fact, I saw something just yesterday that blew my mind. 16 years ago, the United States and the European Union were roughly the same size economies. Since then, the European Union added Croatia, which in theory is a small economic player, but it should add to the overall size of the economy. As things stand right now, the US economy is 50% bigger than Europe! This is how bad the EU economic decisions over the last several years have been, not the least of which is that they have decided they don't need energy.

With that being the case, I do believe that the euro goes to parity, and after the price action on Wednesday, I am even more convinced of this. The question is whether or not parity will hold. I certainly think that if we get there it's likely that we will see a significant bounce, but that is something that I would probably sell into. In fact, any time this pair bounces, it's time to start selling again Forex Brokers1 Get Started 74% of retail CFD accounts lose money

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