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Is EUR/USD About to Crash?
After a few tumultuous weeks during which the pair turned in one of the most vicious short squeezes ever in the history of the currency market, the euro is back to trading on fundamentals and has resumed its downtrend against the buck.
As we noted earlier today, “It is ironic that the dollar has actually strengthened against the euro in the wake of a decidedly dovish FOMC presser last week, but it may very well be the market’s judgement that the Fed was simply delaying the normalization policy until the December meeting.
We have argued that the Fed may have simply decided to wait until the budget negotiations in Washington conclude and did not want to tighten monetary conditions ahead of what could turn out to be a tough fiscal negotiation that could roil the markets.”
The market appears to be convinced that the greenback rally will resume and today’s price action is confirming the new leg of a downtrend in the EUR/USD. The pairs has lost more than nearly 300 points in just 2 days and looks top be headed towards the 1.1100 figure. A break below would confirm the Head and Shoulders formation and could send the pair towards recent swing lows near the 1.0850 level