Overall, though, in this pair, I’m not expecting much. We have two central banks that are likely to cut rates this year. The Federal Reserve has actually come out and admitted it. The ECB is starting to open up to the idea of it, which of course Germany heading into a recession helps that quite a bit. So, I think what you’re looking at here is a sideways market for most of the year.
We are drifting towards the low, so I will be paying close attention to 1.07 or so and see if we get a little bit of a bounce. And if we do, then I’m willing to take advantage of it. On the other hand, if we break down below there, then it could open up a move all the way down to the 1.05 level. I suspect that would be more of a “risk off” move for the markets in general though, as it would be a strong sign for the US dollar to break out of this range and you probably would see the US dollar strengthening against most other things. That being said, we are starting to get close to a value area so a little bit of patience might go a long way in this pair.
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