The Euro Price Outlook: EUR/USD technical breakout will likely offer guidance, perhaps the most valuable from a currency trader’s perspective. At the end of this technical analysis, you should have learned how to identify the best breakout opportunities within the price action to identify currency price patterns, patterns to watch for and trade them, and more. This article will teach you how to use that information to trade successfully.
Over the past year, the European Central Bank (ECB) has made several announcements in regards to reducing their balance sheet. They have lowered rates, created money to buy government bonds, and opened the markets for trading. These actions represent the beginning of the end of the traditional interest rate structure.
The ECB’s Central Bank’s balance sheet is equivalent to the combined debt and equity of countries like the United States. These countries now do not have to repay their public debt at very low interest rates. In fact, they may not have to do so at all.
The future price of the Euro will be directly linked to how it compares to the rate set by the ECB. When the Euro turns down, the Euro currency rises. In terms of moving averages, one can expect the direction of movement to follow the trend of the index moving higher with each close.
To establish a moving average, we use the simple principle of dividing the price by two. The first closing price has been multiplied by the moving average and subtracted from the second closing price. The resulting figure is the new closing price.
Moving averages help us determine whether the market is rising or falling. We do not need to look too far for data to show the downward trend in the Euro exchange rate. The Euro price has fallen nearly 35% since April 2020. The main cause of this decline is a desire by the ECB to stimulate economic growth through its ability to provide low interest rates.
Since the beginning of this decline, the Euro has been trading in opposition to the Dollar. The downward spiral was contained by just over four years ago, when the Euro was around seventy US cents. Over the past four years, the Euro has fallen an astounding sixty-six percent. At this point, the Euro is hovering right around eleven US cents and will probably continue to fall over the next two years.
This price outlook is somewhat lopsided. There are definitely winners and losers in the Euro price outlook. Just as any trader would expect, traders who were able to correctly identify the Euro price breakout over the last year, enjoyed great profits in this activity. But, traders who did not properly plan for the price movement or just did not do their homework on this opportunity are experiencing losses.
Trading a breakout depends upon recognizing the trend as it develops. The longer the trend remains intact, the greater the chance of the break out. Once the price action breaks out, there is no turning back.
If a trader was fortunate enough to catch the breakout that occurred during the summer of 2020, he or she might have profited very well from this breakout. The price action broke out shortly after the conclusion of the Greek Euro default. Within a week, Greece was to be forced to abandon its debt program. It quickly became apparent that the Greek default was the beginning of a domino effect that would impact countries such as Italy, Spain, Portugal, and Ireland.
After the European Central Bank announced that they would start selling government bonds, the result was the Euro began to rise. In a matter of days, the Euro began to hit highs that would not be seen again for a long time. Then, it began to fall, falling as much as fifteen percent, which is a significant drop and one that should be considered. if you were to take part in this price action.
If you missed the break out, the price outlook for the Euro will likely continue to decrease until a new level of European bonds is introduced into the market. It is important to keep a watchful eye on the markets. and make sure you do not miss this next break out.