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US Fed Rate Cut Sentiment Thwarted, Euro Free Falling

By Glenford S. Robinson

As a result of last week’s US Fed rate cut sentiment, the EUR/USD currency pair picked up steam last week galloping to as high as the 1.1411 level where it met stiff resistance turning the pair back down toward the 1.1390 – 1.1398 level where it wasn’t able to break the 1.1400 barrier again and thus began freefalling after traders realized that the US economy was not in need of any monetary stimulus that would have been created by a rate cut in the area of a possible 25bps to 50bps.

The pair then began free falling down toward the 1.1308 mean level where it broke through this support level and ended up dangling down at the 1.1204 – 1.1193 level where it caught support. Buyers were eager to push the currency pair back up to the 1.1208-11 level which is another mean area visited last month and now is serving as a resistance zone. The pair is currently consolidating around the 1.1208-1.1211 level for a possible push downward on the slightest of negative economic sentiment introduced by any sort of negative economic data coming out of the Euro zone.

It is expected that the pair will possibly touch down at the lower end of 1.1100 possibly protruding down to the 1.1090 area. Some Eurozone macroeconomic catalyst should initiate a push up toward the mid 1.1100 possibly toward the 1.1165 zone before continuing up the charts back towards 1.1204 where it possibly will remain for a week or two until Brexit news that will probably push the pair back down to the low to mid 1.1100’s.

The ECB is hell bent on keeping the value of the Euro as low as possible in order to compete with Trump’s USD for bottom-dwelling supremacy. Going forward, an interest rate decision either by the ECB or the FOMC in the not so distant future favoring the Euro could cause a rapid rise of the currency pair back up toward the 1.1400 level.

We must wait and see what happens next. Until then, lets hold on for dear life because this ride is going to be a rocky one for EUR/USD traders. There is now a new sheriff in town from the French side of town, lady Lagarde, Christine. She will probably do whatever she can to assist in the continued devaluation of the Euro to keep the currency as competitive with the USD as possible.

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