EUR/USD Forecast 05/11: Euro Rally Hits Resistance (Video)

(MENAFN- Daily Forex) The EUR/USD pair rallied a bit early on Wednesday, but perhaps mistakenly so. The elections will change some things, but not enough to relieve Europe of potential energy issues.

EUR/USD

The euro rallied pretty significantly during the trading session on Wednesday as word got out that the U.S. elections had handed the entirety of Congress to Democrats. That being said, it also shows a very failed understanding of the American political system. I think now that the Americans have jumped on board, you're starting to see that play out. It's not the same type of situation that people would think.

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Really, at this point in time, one thing that people forget about is that the Democrats are pretty happy for war as well. With that being the case, not much changes in Iran, and therefore the situation in Europe probably doesn't change too much either. Because of this, I am looking at this as a potential place to buy dollars when the time comes, and it looks like we are continuing to see a lot of overhead resistance.

The real catalyst, I think, is going to be Friday and the non-farm payroll announcement coming out. If the market were to break out to the upside, then the 1.1350 level could be targeted. Anything above there could open up the possibility of a bigger move. To the downside, if the market were to pierce the 1.11 level, then we have a real shot at breaking down towards the 1.10 level.

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I suspect Friday will be crucial. In the meantime, I'm still fading rallies. I recognize we're probably going to be more choppy than anything else, and I'm not looking for anything big between now and the employment report. But all of those issues about European energy went nowhere last night. Ultimately, I am looking to short.

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