EUR/USD Forecast May 9, 2017, Technical Analysis

The EUR/USD pair fell on Monday, as results of the French election came in. Initially, we gapped above the 1.10 level, but it became a “buy the rumor, sell the fact” type of trade. The market even broke down below significant support at the 1.0950 level. The market looks as if it is trying to make up its mind for the longer-term move, because the move for the session was a bit counterintuitive. I also believe that the market does have an upward bias, but there are a lot of concerns when it comes to the European Union, and that will continue to weigh upon this market. Ultimately, I think that longer-term we may try to go to the 1.12 handle by the end of summer, but currently it looks as if you are going to deal with quite a bit of choppiness and difficulty if you are a longer-term trader.
Volatility should continue
I believe the volatility will continue, as there are a lot of concerns when it comes to the European Union. After all, the market should worry about longer-term issues when it comes to the European Union and even though France has essentially voted to stay in the European Union, the reality is that there are several other countries that could vote to leave. There are serious and balances when it comes to the European Union, and I think that is a longer-term issue the traders remain a bit leery about. Because of this, there’s always going to be a bit of an overhang when it comes to this pair. This is especially true if the Federal Reserve does continue to raise interest rates. Ultimately, this currency pair also attracts quite a bit of high-frequency trading, which of course will increase volatility as well. I do have a slight upward bias, but I don’t have any interest in hanging onto a trade for any real length of time. A break above the 1.0950 level for several hours could have the market looking for the 1.10 level and the short-term, but I would not expect much more than that.