Over the course of the last month, the euro has been making steady strides against the U.S. dollar. Now resting at a price up over 1.06, the euro has begun to meet some resistance.
It is hard to know how long lived the resistance will be, but many experts don’t believe that it will last long. The 1.065 mark is not a very firm resistance point, and even the 1.07 mark is likely to be attainable in the next couple weeks. This is dependent on what happens within the U.S. stock market and how the EU responds to England’s separation from the Eurozone, though. Moving forward, these are important fundamental (stock market) and news (Brexit) events to keep an eye on. Even if you are a short term trader, these overarching storylines are going to have a definite impact upon what will happen with the EUR/USD pair.
Luckily for day traders, there are a number of ways to approach the pair and still create a profit. Whether you are a Forex or a binary options trader, you have many choices available to you. This creates opportunity for all sorts of people to profit off of the price action that will be created. Regardless of how you trade, knowing when to trade is almost as important. Trading in the hours when both the European and U.S. markets are open is going to subject you to the highest volume, and therefore the fastest changes in price. If you are a binary options trader, this is the time to focus—mainly right when New York business hours open for the day.
If you are a Forex trader, you have more flexibility depending on what your strategies are, how much leverage you are using, and other factors. Forex traders do not necessarily need fast movement, but rather a sustained amount of movement in the correct direction. That movement needs to be more than enough to compensate for the spread and still create a profit.
It’s clear that an understanding of overall trend is necessary for traders that focus on currency. However, each trade decision needs to be made individually, and under a certain light. For example, if some sort of news event occurs that is likely to give the dollar a big boost upward, taking out a trade that goes with the prevailing trend is foolish and will more than likely be a losing one. As we draw closer to the March 31 date that has been tossed around for the beginning of England’s withdrawal from the European economy, we need to keep this in mind. This event will undoubtedly play a heavy role in what happens with the pricing of the euro. Other events will also have impacts upon both the euro and the U.S. dollar.
Looking at some of the upcoming issues that both the EU and the U.S. will need to face will also be helpful in making predictions for your trades. For example, if a stricter border tax is placed in the U.S. as President Trump has indicated that he would like, some experts are predicting that the U.S. dollar could jump upward in strength by as much as 10 to 15 percent. With the way that the euro is priced, this could even have the potential to push 1 euro down to the value of 1 USD. This is unlikely to occur, but the potential for a shift in momentum does exist. Tariffs and new trade deals take a long time to gain approval in most cases, so this is not something that you should expect to see overnight, but it is one of the many things that could influence the EUR/USD relationship.