The EUR/USD pair broke down significantly during the day on Friday, driving down towards the 1.1775 handle. The US looks likely to have a reasonably hawkish Federal Reserve Chairman going into the future, and it makes sense that the US dollar should strengthen. However, there is a massive amount of support at the 1.17 level, so I think the downside is somewhat limited. If we were to break down below that level, then I think the market goes down to the 1.15 level underneath. However, I think that a bounce from here is probably likely, and should send this market towards the 1.1850 handle above. Ultimately, I think that the market should continue to be one that will be noisy, especially considering that we are trying to get a handle on what the European Central Bank will be doing.

Overall, the longer-term trend for the EUR/USD pair is higher, but it is also a bit parabolic. A pullback would make a lot of sense, and it’s likely that the noise in the market should give us an opportunity to pick up value given enough time. Short-term trading to the downside is possible, but quite frankly I think that eventually we will see the buyers return. If we did breakdown below the 1.15 handle though, that would be catastrophic for the Euro, and send this market the much lower levels. Ultimately, this market should find buyers, but we can’t guarantee that with the hawkish stance of the Federal Reserve. Quite frankly, I think it would only take a handful of words out of Mario Draghi’s mouth to send the euro lower. Overall, this market continues to be choppy, but I still favor the upside, especially of stock markets continue to rally worldwide as they have.

EUR/USD Video 23.10.17

This article was originally posted on FX Empire

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