EUR/USD Price Analysis: Treading on Thin Ice After Dismal German Data

Euro/USD/CHF price analysis are following the same set of patterns. The dollar and euro continue to run in lock-step. Their average daily range, though slightly different at times, remains largely unchanged.

One key factor has prevented the dollar and euro from following each other too closely. A particularly nasty shock to the dollar or the euro would allow it to rise, devalue, then fall again. In such a scenario, currency traders would profit greatly if they took a short position, buy the dollar and hold on until the currency recovers.

However, most currency traders recognize that the euro and dollar are likely to remain largely steady for quite some time. This sets up a dilemma for many traders. If you believe the euro and dollar will continue to rise, why not make a short trade to capitalize on an upward trend?

Even if you believe the dollar and euro will rise, you might still make a long-term hedging trade. You want to have a long-term position with a margin account, so that if the dollar or the euro begins to fall, you can sell your account position at a profit. Since all positions have a corresponding loss, the only risk you will face is a few dollars worth of profit.

The key is to remain disciplined in your thinking about the dollar and euro. They have been stable for a while but are now showing signs of instability. There could be several reasons for this. One reason could be a crash in oil prices, or an impending loss of euro-zone membership, or a major financial crisis.

Now let’s take a look at what the euro is doing. Right now, the euro looks to be following the dollar and may even be increasing. These are not good signs for investors who are interested in a long-term investment strategy.

The euro’s strength is important to consider in the Euro/USD price analysis, since there are also indicators telling us that the euro is strengthening. If you were looking to make a long-term investment with a margin account, a strong euro should keep you from making a loss. This is a good thing for the euro, but not a good thing for the dollar.

The euro has been gaining recently. This is great news for investors, since the weaker euro will mean a lower exchange rate for the dollar. So far, this is not so much a good thing for the dollar. Because the euro is weak, it is costing investors more money to exchange their dollars for euros.

Euro weakness also makes the dollar weaker, because the weaker euro increases the price of the dollar. This does not bode well for the dollar and could cost investors some money.

The point I am trying to make is that there are strong reasons to stay disciplined and cautious about the euro and dollar. This is especially true if you are trading on margin accounts.

As I mentioned before, the euro and the dollar are following a similar pattern. You will see the euro rise before the dollar rises, and the dollar rise before the euro rises. This pattern continues for at least the next few months.

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