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EUR/USD Forecast 25 Sep 2014

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EUR/USD Chart 25 Sep 2014
Average: 3.9 (4 votes)

Euro bulls hopes dashed to pieced with another move lower

The EUR/USD pair has surprised us in its latest move. The support level around 1.2815 has given way and the single European currency tanked to mark a new multi-month low just below 1.2770 as of writing. That said we are seeing some consolidation in the coming hours which could permit us to hop on the trend and catch another leg lower.

As EUR/USD traders have listened to ECBs president Mario Draghi overnight, they felt like they missed some of his rhetoric which could drive the Euro even lower and sold the currency once against against the US dollar. He said that the ECB expects only "modest growth" in the second part of the year.

He went on to explain that the European Central Bank (ECB) has more tools at its disposal to stimulate the economy and inflation should it find necessary to act. Those are the words that sent the Euro tumbling another round and we are now at 1.2766.

Our analytics yesterday have highlighted this danger, but we were caught wrong footed by expecting some sort of a correction. Long term support in this pair lies around 1.2750, which is the monthly chart we're walking about, so this level could be strong.

Then again if it gives way by the end of this trading week, we could see another squeeze lower and fast drop towards 1.2300. But lets not think that much ahead - at the moment we have no choice but to listen to the market, and it's saying that the EUR/USD is going lower.

However we are not comfortable to buy puts from current levels, instead we would be waiting for a rebound, perhaps all the way to the 1.2800 area to buy those daily puts. Looking at the chart, the safest bet is to buy puts at 1.2815, however in the case of a break above 1.2840, we would be reversing and buying daily calls.

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