Traders seems to be increasingly hesitant buying the pair at current levels, especially with Euro-zone economic data likely to worsen. The main reason price remains near all-time highs is because the ECB continues to maintain a tough stance on interest rates in the short term to control inflationary pressure. But just how long will this last if economic data being released gets suckier and suckier?
If the ECB do stick to their guns with maintaining interest rates, then the dollar will continue to remain weak, since the Fed continues to lower interest rates. I'm not so sure how long the ECB can hold out though.
Either way, I think there's little value selling the dollar at these levels and look to get in early to catch a big price reversal.
Technically, price has been trading sideways for almost two weeks now. There is bearish divergence as the oscillator seems to be weakening.
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