• May 27, 2024

A “buying opportunity” for EUR/USD?

The dollar experienced a temporary surge against the euro early today as online forex traders anticipated an announcement that Congress had reached an agreement on the proposed bailout of Wall Street. EUR/USD had moved as low as $1.45599 before Sen. Christopher Dodd, chairman of the U.S. Senate Banking Committee, announced this afternoon that a “fundamental agreement” had indeed been reached. The reaction from the forex trading community was markedly ambivalent, especially in contrast to the stock market, where the Dow Jones had added just about 200 points as of nearly 3PM in New York; EUR/USD currently stands at $1.46150 and has moved primarily upward throughout the afternoon.

Click on image to enlarge.

As the ten-year chart above reveals, the past several months of EUR/USD price activity have been historically aberrant. Yet despite some worrying economic news and the likely impact of the bailout on the federal budget deficit, most currency trading analysts are either neutral or bullish on the greenback. FX Street’s Analysts Sentiment Index for EUR/USD shows 50% neutral, 33% bullish, and only 17% bearish. Daily FX likewise reports “effectively neutral speculative positioning” at this time.

However, Bloomberg has been reporting this week on some forex analysts who are emitting very distinct growls. On Tuesday, TD Securities economist Joshua Williamson said that U.S. deficit issues could push the dollar up to $1.95 per euro. And today, a research note from Citigroup called the current euro price dip a “buying opportunity.” The euro could move up to $1.53, according to the Citigroup report.