EUR/USD Price Forecast – Euro Reaching Towards 1.22

During the Friday session, the Euro has rallied significantly to reach above the 1.21 handle, an area that has been important a couple of times previously. That being said, the 1.22 level is the real prize in the short term, and the fact that the retail sales were so poor the United States has people thinking that the Federal Reserve may back off of monetary tightening, which of course was never really going to be the case anyway. The markets had spooked themselves recently, based upon the idea that perhaps the Federal Reserve would be forced to fight inflation and raise interest rates, thereby having a complete repricing of everything.

EUR/USD Video 17.05.21

All things been equal, I think that the US dollar continues to falter, mainly due to the idea of loose policy going forward from the Federal Reserve, something that they have been steadfast in keeping in the forefront, despite the fact that the market has deemed otherwise recently. At this point, I think you will continue to see a lot of noisy behavior, and the last couple of days have been yet another sign of that. Nonetheless, the Euro still has a lot of noise above to worry about, not only at the 1.22 handle but also the 1.23 handle. Because of this, the market is likely to continue to see choppy behavior to the upside, so I think pullbacks continue to be bought into, as the US dollar is certainly going to continue to suffer at the hands of massive stimulus and ultra-loose monetary policy. Because of this, I think waiting for short-term pullbacks to take advantage of will continue to be the best way to trade this market.

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This article was originally posted on FX Empire

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