The US dollar strengthened against the euro this week as markets assess the likelihood of an ECB rate cut. We've already locked some profits of the earlier bull-move in our Trading Club and closed the remaining position until the dust in the market settles.
Bear in mind that, although the Fed took a dovish stance, there is an important difference between the position of the Fed and the ECB.
While the Fed wants to cut rates to move the US dollar lower, the US economy is still pretty strong unlike the European economy, particularly Germany.
The EURUSD pair triggered a H&S pattern that projects a profit target around the 1.10 level, and the pair is already near multi-month and multi-year lows.
A dovish ECB may send the pair below 1.11 and trigger a cluster of stop orders, in which case the 1.10 level will act as a magnet.
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Bear in mind that, although the Fed took a dovish stance, there is an important difference between the position of the Fed and the ECB.
While the Fed wants to cut rates to move the US dollar lower, the US economy is still pretty strong unlike the European economy, particularly Germany.
The EURUSD pair triggered a H&S pattern that projects a profit target around the 1.10 level, and the pair is already near multi-month and multi-year lows.
A dovish ECB may send the pair below 1.11 and trigger a cluster of stop orders, in which case the 1.10 level will act as a magnet.
Like our analysis? Please hit the "LIKE" button to support us. Thanks!
