Barring any major moves by the Fed or the ECB, the choppy price action in the EUR-USD will likely continue.
From a fundamental perspective, Goldman Sachs has changed its rate cut prediction for the European Central Bank from April to June. As for inflation, it’s the villain that just won’t quit. Despite a heroic effort to tame the beast, whispers of high inflation reports and persistent wage pressures hint at a long battle ahead for the U.S. and EU.
From a technical analysis perspective, chop is the name of the game, according to the Ichimoku Kinko Hyo:
What Is Ichimoku Kinko Hyo Used For?
For those who’ve never ventured into the Ichimoku Kinko Hyo system, don’t sweat it. The key takeaway from this visual enigma is that the current price is lounging comfortably inside the Cloud—that big, green shape. The Cloud is a zone of volatility, indecision, whipsaws, and a healthy dose of misery.
For the optimists (bulls), the dream scenario involves the price rising above the green Cloud, specifically over the $1.0944 hurdle, before they even consider going long. On the flip side, the pessimists (shorts) are looking for a nosedive—a clear plunge below the Cloud.
However, that’s a steep fall from where we’re at. And should the bears manage to drag EUR/USD down to these depths, betting on a sustained close below the Cloud’s bottom is like betting on a three-legged horse in the Grand National. Why? Because the bottom of the Cloud (Senkou Span B) is the strongest support level.
Indecision Until the EUR/USD Breaks Free
So, what’s the bottom line? Until the EUR/USD decides to break free from the Cloud’s gravitational pull, either shooting for the stars or drilling to the center of the Earth, expect more of the same: indecision and a trading environment choppy enough to make a seasoned sailor seasick.
