The usd is clearly in a corrective phase, but fundamentaly the usd is in better shape than the euro. When comparing both monetary policies, they are moving polar opposite, the ecb will continue to ease while the fed is projecting to continue tightening which is positive for e dollar.what seems to be holdingthe dollar back is the uncertainty behind trumps fiscal policy and if tax cuts and monetary repatriation will happen, which i beleive is just a matter of time til it happens. Looking at the u.s broader economy the u.s has been in a sustained path to growth. In dec ism was at 13 month highs, pmi recovered for the 7th straight month , jobless claims fell to 43 year lows, wages continued to increase. Inflation has started to tick up as well, so overall it appears the u.s economy is starting to gain some traction. On the other hand, the eurozone. you have the euro which showed signs of life in some nations but italy,greece and brexit are major factors in the recovery in my opinion. The ecb has its hands tied in a way because although Germany and the Netherlands, for example, are doing well. Any tightening may cause a collapse in italy and greece. Their inflation was due to higher energy prices and not from such things like wage growth and other core inflation factors, which draghi pointed out last week. Their unemployment is at 9.8% average, so it appears to me there is still a long way to go in the euro zone recovery as a whole.
Technically: the eu is t the 38% fib line now but with the continued uncertainty over policy may tick up to the next fib lvl area imo. The 1.61 extension ( calculating from the 1.0720 area high to the 1.058 area low) is around 1.08 area which is also the a of the 50% fib measuring the top from he ection run to the lows. I do think its possible eu will see 1.09 area again at some point (61% fib) but i beleive the market will range and possibly create an verted h&s pattern over time. Once we have a clearer picture of trumps policies a little later this year and the fed is able to move again, i hink thats when the usd bulls will return with some vigor and possibly push towards parity...
Not trading advice, just my view on a possibility
Technically: the eu is t the 38% fib line now but with the continued uncertainty over policy may tick up to the next fib lvl area imo. The 1.61 extension ( calculating from the 1.0720 area high to the 1.058 area low) is around 1.08 area which is also the a of the 50% fib measuring the top from he ection run to the lows. I do think its possible eu will see 1.09 area again at some point (61% fib) but i beleive the market will range and possibly create an verted h&s pattern over time. Once we have a clearer picture of trumps policies a little later this year and the fed is able to move again, i hink thats when the usd bulls will return with some vigor and possibly push towards parity...
Not trading advice, just my view on a possibility