After staging a huge 750-pip rally from the October 4 low into the October 17 high, the EUR/USD -- the euro-dollar exchange rate and the world’s most-traded forex pair -- fell some 250 pips this week.
The reason for the latest leg of the decline is said to be “a warning from Moody's Investors Service that France's Aaa credit rating could be at risk.” (Oct. 18 The Wall Street Journal)
If you had to make a trading decision regarding the EUR/USD right now, what would it be?
The latest news story might have you think bearish -- bearish on the euro, bullish on the dollar, that is.
The rally from 1.3146 is in five waves, complete with a momentum divergence accompanying the fifth wave. The fourth wave of one lesser degree to 1.3685 might offer support.
So far, the EUR/USD has indeed “found support in the 1.3685” area: On Tuesday morning, the pair rebounded off the mid-$1.36 range.
Our Currency Specialty Service tells you right now whether the latest EUR/USD rally is set to continue, or if the decline might return.
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