Today’s Shaker – The Euro

As expected, today’s much anticipated European Central Bank Interest Rate Decision, ECB Monetary policy statement and press conference with ECB president Mr. Mario Draghi, caused huge volatility in the Forex market and particularly with the Euro currency crosses.

Euro Swing

We saw the EURUSD drop from 1.0987 to 1.0844 (143 pips) in just 15 minutes, and then it continued to decline for another 45 minutes to a low of 1.0823. The Euro plunge didn’t last long as we then saw this major currency pair jumped 389 pips to 1.1212 – its highest price since February 15th.

Overall, the Euro has climbed 3% against the Greenback, which boosts confidence in the Euro’s ability to make a long-term recovery. We previously discussed the possibility of parity, and we do not discredit this possibility. That said, now the chatter on the Forex street, so to speak, is the likelihood that the long term trend of Euro weakness is on its way out.

The Euro Trend – A Bird’s Eye View

Before jumping the gun though, let’s take a moment to zoom out and see the big picture. Are recent Euro gains enough proof that we are on the dawn of a new Euro surge?

Look at the weekly EURUSD Forex chart below, which goes back 10 years to March 2006. I remember clearly the exchange rate of the EUR that year because as a USA resident traveling in Europe at the time, the exchange rate hurt my pocket book. The Euro kept climbing until it finally hit a 10 year peak in 2008 at the high price of 1.6018.

Then, continuing until July 2012, we saw a steady zig-zag pattern as the EURUSD dropped and recovered at almost the exact same low and high prices until finally in April 2014, the EUR hit major resistance and started a steady decline until it reached a 10 year low of 1.0461 in March 2015. The Euro keeps retesting this level but has not yet broken through. If we see a break of the 1.0461 price on the downside, I believe the possibility of parity is still on the horizon. On the other hand, a major level to the upside is 1.2041 and if we see the EURUSD retest and break this level, then we will officially be on a major trend reversal.

Trading The Euro

In the meanwhile, at ForexSignal.com we are watching keenly the overall trend of the EUR/USD and we will be seeking possible sell or buy opportunities based on our specific trading criteria. As our criteria confirms, we will be sending Forex signals to our email and SMS Forex Signal recipients and Forex Trade Copier clients all over the world.