Hiren Garasondia
Independent Analyst
EUR/USD is the most traded currency in the world.
Predicting the exact direction of EUR/USD is challenging due to the complex interplay of economic and political factors. However, here are some potential scenarios:
Further price decline
Weakening eurozone economy: If economic data from the Eurozone continues to disappoint, it could weaken the Euro and push EUR/USD lower.
Stronger US economy: Conversely, robust economic data from the US could strengthen the Dollar, also putting downward pressure on EUR/USD.
Shifting monetary policy: If the European Central Bank (ECB) adopts a more dovish monetary policy while the Federal Reserve (Fed) maintains a hawkish stance, it could widen the interest rate differential and favor the Dollar.
Profit booking and potential reversal
Overbought conditions: If EUR/USD has experienced a significant rally, profit- taking by traders could lead to a temporary price correction or even a reversal.
Unexpected economic data: Surprising economic data releases from either the US or the Eurozone could trigger a sudden shift in market sentiment, potentially leading to profit booking.
Geopolitical events: Unforeseen geopolitical events, such as political instability or international conflicts, could increase market volatility and lead to profit-taking as investors seek safer havens.
Recommended trading strategy for EUR/USD
The Euro (EUR) remains largely stable in the mid-1.0343 range against the US Dollar (USD) on Friday at morning European hours, despite President-elect Donald Trump's warning to Europe of potential tariffs across the board unless it increases its imports of US energy products.
EURUSD prices dipped to the 1.0343 range during the early European trading session today, presenting a potential buying opportunity.
Should EURUSD prices increase, they may test the 5-day moving average around 1.0425. A further climb could bring prices toward the 10-day moving average at 1.0501. If prices break above the 1.0534 level, additional upward momentum may open up fresh buying opportunities, potentially driving prices to 1.0631, the high for December.
Holding period - Maximum 2/3 sessions (almost 2.5-3% uptrend/profit booking)
Conclusion
This is a general interpretation. The specific details of the trading strategy would depend on the individual's unique perspective and investment goals. It is crucial to conduct thorough research and consider professional advice before implementing any trading strategy.
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