EUR/USD Forecast October 31, 2017, Technical Analysis

The EUR/USD pair rallied initially during the day on Monday, but found enough resistance to turn around and roll over. It looks as if the Euro is going to continue to fall, and if that’s the case I think that it’s only a matter of time before we go and trying to fulfill the longer-term head and shoulders pattern, reaching down to the 1.13 level underneath. The market continues to look as if it is a “so the rallies” situation, and therefore it’s not until we break down below the 1.13 level underneath that I think that we would continue to go even lower. So far, this is essentially a technical move, so I don’t think that it’s necessarily a longer-term move.
If we were to break above the 1.17 level, then that would negate everything that we have seen, and I think send this market looking to the 1.20 level rather rapidly. All things being equal, I believe that the sellers will continue to assert their dominance, due to the Federal Reserve looking likely to raise its interest rates a couple of times over the next several months, while the ECB looks willing to extend quantitative easing, albeit at a smaller pace. The breakdown from Thursday has been rather poignant and sudden, and sliced through the potential neckline of the head and shoulders with great ease. That tells me just how different the attitude is in this market, and therefore I believe that if we broke above the 1.17 level, that would be very positive, as it would be a complete turnaround after the sudden and violent reaction. That doesn’t look likely to happen, so I believe that we will continue to see the US dollar pick up strength, not only against the Euro, but against most other currencies.