Will the Euro Hit a Wall?

In mid-March, we wrote about the potential strength of the euro due to seasonal and technical pressures. However, we are here to warn you of the opposite scenario. The seasonal strength in the euro generally tapers in early to mid-May and the chart is suggesting that most of the buying has probably exhausted itself. Also, fundamentals backing both the euro and the greenback appear to be overpriced at the moment. After all, the dollar is collapsing in the face of a steady interest rate hike campaign by the Fed and the euro is soaring on stable but less-than-stellar economic data. Thus, it seems reasonable to expect the euro currency to retreat into correction mode in the coming weeks or months.

Our friends at MRCI provide seasonal charts compiled over the past 30 years. According to the data, the euro has a strong tendency to find an intermediate-term top following an early May rally. Of course, we understand that seasonal tendencies are far from a guarantee, but it is worth noting that the upside in the euro is far less uncertain going forward....288 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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