In a surprising move during the Christmas holiday period, the Euro has continued its upward momentum, reaching a level of 1.11 against the US Dollar. The unexpected rise, occurring in a shallow market with limited news, is attributed to the lingering impact of the Federal Reserve’s change in rhetoric.
The shift in sentiment from the Fed has been a persistent factor influencing the US currency. The Euro’s surge is believed to be triggered by stop-loss orders from portfolios that were predominantly favoring the US Dollar. As the calendar year concludes, these portfolios are compelled to close out open positions, contributing to the Euro’s upward movement.
The previously anticipated level of 1.11 has been achieved, aligning with projections in a previous analysis that considered it a target for considering the purchase of the US Dollar. Despite the current positive momentum of the Euro, there is a belief that signs of fatigue and an impending correction may soon emerge.
While the Fed’s change in rhetoric has played a role, doubts persist regarding its ability to sustain the Euro’s upward momentum over an extended period. With no significant events scheduled for the next two days until the year-end, aside from the weekly US jobless claims announcement, the Euro’s trajectory may face challenges.
Despite the technical picture currently favoring upward momentum, the absence of substantial reasons for the Euro to sustain this dynamic raises skepticism. The author anticipates signs of fatigue in the near future and outlines a strategy to initiate bets in favor of the US Dollar at levels above 1.11. Given the surprise rise and the relatively easy securing of the 1.11 level, the target for initiating Dollar purchases is adjusted to 1.12.