Markets are always in a precarious balance but with stocks pulling back today and the EUR failing to break 1.50 against the USD, it feels as if there is a prolonged agony in the forex market.
At the moment, we can see that the 1.5050 – 1.4800 range is well-established. What makes it so important is that 1.50 has capped the euro in the past and a definitive break higher will probably mean a re-test of the all-time high near 1.60.
What we’re seeing is a negative scenario developing. We see lower highs since the failure at 1.5050. At the bottom of the range, 1.48 looks like solid support but if it breaks, there will likely be extended downside. Looking at the stochastic chart, a break lower is the favoured scenario but go with a break in either direction.
The great thing is that a resolution is imminent.