How long can EUR/USD last? This is a question that is being asked by traders who are watching the behavior of the market. EUR/USD stands to benefit when the European countries begin to deal with major trade problems. As long as the problems are minor, the European stocks and currencies are likely to rise.
The Chinese may deal with small problems in the stock market, but they do not control the economy. Therefore, if they have a problem, it will affect the United States. Also, it will affect the Japanese stock market.
At this point, we can assume that the United States will start to get major trade issues. EUR/USD could reach an all-time high on the radar of most investors.
Some of the problems that will arise at this point will include the falling of stock prices in the United States, the central banks beginning to tighten their monetary policies, the Fed showing signs of weakening its balance sheet, and the ECB cutting interest rates. All of these things will create a major cause for concern.
When the European central banks begin to tighten their policies, the pressure will begin to build on the dollar. And that can only mean one thing – money will flow out of the dollar and into the EUR/USD currency pair. If you are an investor, you will want to buy the EUR/USD currency pair now before the trend reverses and the trend goes back up.
The European central banks have to have a very weak economy in order to pull off this action. It cannot be much worse than we are seeing now.
There is a chance that the troubles that are in Europe will turn into a huge economic crisis in the United States. This is what makes this situation so interesting because it has the potential to affect the entire world.
Therefore, there is no way that investors can ignore this warning, even if the markets are behaving normally. It is just a matter of time before the EUR/USD falls back below the levels that were achieved after the market began to move up during the height of the price action.
While it may be tempting to go short in a bull flag pattern, this is the wrong move. It is far more prudent to go long in this market.
If you purchase the EUR/USD with the intent of trying to put a lid on the European central banks and the weak economy, you will end up losing everything. You can make a lot of money if you buy at the low point of the market, but you will never have that opportunity again.
Therefore, buying now and selling later will be the best move in the market. Then, you can be assured that the market will follow a different path in the future.