It has been a wild year for the euro and the U.S. dollar, and world events promise to keep the excitement going into 2016. Terrorist attacks in Europe, Federal Reserve uncertainty in the U.S., and other events have played havoc on any sort of stability that this pair had, and things are still developing as some sort of traction is sought. The EUR/USD has ranged between 1.0458 and 1.2570 over the past 52 weeks, and currently resides closer to the bottom of this range than the top at just under 1.10. It’s easy to say that the general trend of this pair has been downward, but beyond that, any given day is still tough to predict.
Besides the number of other major fundamental factors weighing on prices, keep in mind that 2016 is a presidential election year in the U.S., too, and this has the ability to have a profound impact on short term currency prices. Political events, especially if an unexpected candidate wins, can drive short term prices in wild ways. The Republican candidate leading polls right now–Donald Trump–will have a much different influence on what the economy will do than if leading Democrat–Hillary Clinton–were to win. This is still too far away to predict what will happen with any degree of certainty, but it’s a good thing to keep in mind as we draw closer to Election 2016 in November.
Right now, it’s really the technical indicators that will be making a world of difference on what Forex prices do, especially when it comes to either of these two currencies. The shorter the term of your trade, the more heavily technicals play a role. So if you are a 60 second binary options trader, or even a 5 minute day trader in either market, this is what you should be giving the most attention to. Moving averages are an easy way to visualize what you should do, and this is one of the reasons why MACD is such a popular tool. Looking at this, we can see that the EUR/USD is beginning to pull back away from the 200 day moving average, and this is a signal that can trigger action.
Many professional traders believe that there’s currently a resistance point at 1.10, which is almost precisely where the pair lies now. As this point is approached, the long position on the euro becomes more and more attractive. If 1.10 is breached, there’s potential for the EUR/USD to soar up to 1.12, or maybe even as high as 1.14, although the former is far more likely if current events stay the same. This creates a sort of balancing act, so do pay attention to the news for any developments, either major or minor.
There is considerable more support for the euro to rise than for it to drop, and that favors a short term bullish trend, dependent upon the timeframes your trades are focused on. Minute by minute trades still need to be analyzed, but a rise in price is now more likely than a drop. This is true, according to analysts, as long as the EUR/USD stays above 1.0795. If this point is broken and prices drop below it, the trend could turn bearish once again and threaten yearlong lows. While this range of 1.08 to 1.10 is maintained, oscillation is likely and price prediction becomes a matter of measuring the minutiae. Make the changes in your analysis software–MetaTrader 4 or whatever else you might use–to reflect this for best results.