The EURUSD pair was just a few pips short of 1.150, last week. All the signs point to the pair heading much lower over the next few months, with a few unknowns along the way.
Geopolitics in Italy and Spain are currently hurting the euro currency as a wave of populist anti-euro politicians take the reins in these countries. Let’s see what these guys actual do as opposed to what they say.
On the economic front, Mario Draghi at the ECB knows that any increases he makes in interest rates will create a domino effect in the European banking system and bring down the whole house of cards as billions of borrowed money across Europe won’t be serviced.
The sign are bad for Europe regardless of Mario Draghi’s positive spin. What else can he say after 10 years of printing money and a zero interest rate policy… “I failed and am the worst Central Banker on the planet”. Never going to happen, so the pretence that the Eurozone is doing well continue.
The US had strong employment numbers and wage growth on Friday which pretty much nailed a further 0.25% interest rate increase in the USA in June which should strengthen the dollar further.
My only real concern and the real unknown for the pair is the impact of new trade wars in Canada, Mexico and Europe that Trump is kicking off. We are going to see Tit for Tat tariffs that will benefit no one and create huge uncertainty across the markets.
I am cautiously bearish on the pair and would prefer to sell closer to 1.1950 level but this may be wishful thinking that the price will reach here in the short term.
We are currently in a range of between 1.1550 – to 1.1750, so I will wait to see how the price reacts in the upper price and incorporate any new political or economic data into my thought process before pulling the trigger on a sell trade.
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