This is a market that I think is going to have to be very cautious in, but if we get to the outer edge of the consolidation area and show some signs of exhaustion, then I’m willing to fade that move because it has been so stubbornly sideways.

• The Euro initially fell during the trading session on Friday, slicing through the 200 day EMA before turning around and rallying again, all things being equal.
• It looks like we are trying to get back to the middle of the larger consolidation area that is bordered by 1.10 above and 1.07 below.

In general, we are right here in the middle and it suggests that this EUR/USD market is going to remain very neutral. That’s not a huge surprise because  most non-farm payroll Friday sessions end up being somewhat unchanged. And that’s exactly what we are seeing right now. In general, I think this is a situation where you’re going to have to be very cautious about getting too big. But at the same time, you also have to look at this through the prism of using it as a proxy for an indicator. You can get an idea as to how the US dollar might be doing during the day and trade it against other currencies.

Forex Brokers We Recommend in Your Region

See full brokers list

If we were to break out of this 300 point range, it would obviously be a big deal, but I just don’t see any reason for it to happen right now because both of these central banks are likely to be cutting rates later this year. And therefore, I think we stay very, range bound to say the least. In general, this is a market that I think is going to have to be very cautious in, but if we get to the outer edge of the consolidation area and show some signs of exhaustion, then I’m willing to fade that move because it has been so stubbornly sideways.

However, if we break out of this range, while I think there is certainly a potential trade to be had, I think that the real returns will be found by trading the Dollar in the same direction against other currencies that it is going in this pair, as it is a bit of a proxy for the US Dollar Index.

Ready to trade our Forex daily forecast? We’ve shortlisted the best forex broker list for you to check out.