Whenever the market is advancing towards historic heights or plummeting near record depths, traders' opinions tend to be really polarised - some expect to see the trend continuing to break records while others anticipate an immediate reversal. It is usually the case with trading that one of those two groups is right. But why is this common knowledge worth mentioning at all?
The EURUSD is not trading near such historic peaks and valleys at the present moment; however, the pair is consolidating just below a major resistance level that has been prevalent for nearly three years. Given the massively undervalued U.S. dollar, traders have started to weigh in on just how far the pair can go. As opinions become increasingly more skewed, so is the underlying volatility likely to increase. This, in turn, is going to affect the pair's price action greatly.
On the one hand, the reeling dollar woes continue to be exacerbated by vaccine optimism, as global demand moves away from lower-risk securities. This is the primary reason for the strong bullish commitment of the EURUSD in the short-term.
On the other hand, there are no reasons to expect that the greenback's freefall will continue indefinitely. Manufacturing PMI, Services PMI, and unemployment rate data are scheduled for publication later this week, which is likely to affect the value of the dollar. Moreover, expectations for another robust earnings season, which is due in two weeks, is expected to help the greenback recuperate.
|Short Term||Long Term||Net % Gains|
|186 PIPS||0||99 PIPS||0||
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