The EUR-USD Have Fallen on Hard Times and Continue to Fall!
(By Glenford S. Robinson)
The Eurozone is not doing as well as one would’ve hoped with annual GDP growth in the Euro zone edging down to 2.1% in the second quarter from first quarter readings of 2.4% and private consumption growth losing steam.
GDP growth is a major macroeconomic measuring tool used to measure the macroeconomic health of an economy. So, it is not hard to see why the Euro zone currency, the EURO is losing ground against currencies with stronger economies, such as the U.S. with is steady dose of interest rate hikes.
Higher interest rates currencies entice bond market investors to invest in countries with the highest interest rates. When interest rates begin to rise, new bonds will pay investors higher interest rates on their loaned investments than older bonds will.
So, bond investors will invest their money in countries with the highest interest rates and withdraw their money from economies with the lowest interest rates. The U.S. is steadily increasing interest rates while the Eurozone interest rate is set at zero.
The U.S. interest rate is currently at 2.25% and is rumored to increase in the near future, while the Eurozone interest rate is parked at zero with no intention of rising. So, the Eurozone currency (EURO) suffers when it goes up against currencies with higher interest rates like the USD.
The EURO has been under constant and continued pressure since the start of the year in February 1st 2018 when the EUR/USD currency pair hit a high of 1.2523. Since then, there has been a vicious downward cycle culminating into other vicious downward cycles with no end in sight.
As recently as August 14, 2018 the currency pair hit a low of 1.1330. Compared to the EUR/USD current price of 1.1335 as of writing October 31, 2018, it is very likely that the currency pair will again test the 1.1330 level.
The moment the EUR/USD pair went below our red zone level of 1.1358, we knew that the pair would continue its downward trajectory. How did we know this? We knew this because we used our Mstardom Finance proprietary trading strategy to deduce the answer.
We are also predicting that unless there is a major positive news catalyst that could initiate a reversal to the upside from the 1.1300 level, the currency will continue to slide down toward our next red zone price level at 1.1212.
There is no solid macroeconomic reason why the price won’t hit our new red zone target of 1.1212. We have looked at a multitude of signals that have confirmed that our prediction has a very high probability of being correct, and we know in trading that probability rules. So, let’s see what happens in the next two days.
By the way, we are not finished yet. Our next red zone prediction target is at the infamous red zone price level of 1.1066. At this level, anything can happen. A reversal could take place or a continuation of the downward trend could occur. We will probably follow this up with another technical analysis article, but until then, we will speak to you all!
Disclosure: I/we/Mstardom Finance does not have a position in EUR/USD.
Disclaimer: ©Mstardom, Inc., Mstardom.com, Mstardom Finance does not provide investment advice.
Mr. Glenford S. Robinson is the Chief Executive Officer and Founder of Mstardom Finance. He is the editor-in-chief of News and Magazine article publishing. Mr. Robinson is also the lead developer of the Mstardom Finance Platform at Mstardom.com. He is passionate about quantitative finance and technologies associated with that discipline, such as python-based algorithmic programing. Mr. Robinson is also a Clinical Laboratory Scientist currently practicing laboratory medicine. When Mr. Robinson is not practicing laboratory medicine, writing articles, or studying finance, he is creating mathematical and statistical modules, using quantitative approaches to identify trading opportunities in the Forex and Stock Market.