The key things to watch in the EURUSD going forward

Euro Fx/U.S. Dollar FX:EURUSD

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I am watching the EURUSD because it seems like an interesting pair that describes two wildly separate monetary and fiscal polices. They diverge in many ways and I don’t think they share much in common. Before we get to that, let me first say congrats to those who bought this near the lows because they believed in the trade, saw the set-up or knew the Euro was undervalued at those levels. Kudos.

So two things to point out:

1. The lows held! (Yellow box)
2. The heaviest Volume Profile range has been cleared with ease.

This is a weekly chart and goes back to 2014 when the big drop first started.

Now to the macro thought process and long-term retrace of the Euro . It really comes down to a few key things:

Will years of austerity finally pay off? Has the Eurozone fought for a better balanced budget than its appears and now will come out of the Coronavirus crisis even stronger and more prepared? This is a key question and I am starting to think there is a possibility that the strength of Europe might have been short term pain for long term gain as budgets got put in order. We shall find out and I will be curious to hear your thoughts. Remember I am no expert, I am simply writing my thoughts out.

Another thing I am thinking about is the Hamilton bonds and the growing sophistication of EU members and how they are approaching this crisis. This is impressive! If they can keep this up… well, I understand why the Euro might be gaining. Lastly, this is a EURUSD chart and you do have to ask yourself: is the US policy really that much better than Europe’s? I think some people are starting to grow doubtful of that.

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Let’s see!

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