EUR/USD has been on a steady upward trend, but now the EUR/JPY has taken a sharp turn as European Central Bank (ECB) meets in Frankfurt. The recent sharp turn has brought the EUR/JPY into a bearish trend that will eventually take it to its weakest level against the USD since March 2020.
A break below the EUR/USD level would bring about a large correction on the EUR/JPY, and EUR/CHF, which is a stronger currency compared to the EUR/USD. However, the recent strong correction is likely to be short lived, as the EUR/CHF may see a recovery soon. EUR/USD and EUR/CHF can be considered as safe-haven assets, and traders who are expecting a EUR reversal should not expect a long-term benefit from the correction, as the EUR/USD is expected to continue to rise again once the correction is over.
EUR/USD has been rising rapidly, and a break of the $1.15 level may bring about a strong correction, as traders are anticipating more EUR reversals. However, a break below the break of $1.14 level may be too late as EUR/USD is expected to retreat and this can only result in a minor correction on the EUR/USD and EUR/CHF. However, the current correction may last longer than traders expect, as the EUR/USD may see a further decline and then rebound once the correction is over.
While the EUR/USD may be on a bullish wave, this trend is unlikely to continue, as the Federal Reserve will not change its monetary policy until the end of this year. In addition, the Federal Reserve has already taken measures to curb the growth of bond issuance, which could further dampen the growth of the bond market in Europe and may force central banks in the United States to tighten their monetary policy to support the economy.
There are few major support levels in relation to the EUR/USD level, and the break of this level may cause another significant correction on the EUR/USD. However, if investors are expecting a reversal on the EUR/USD, they may be surprised to see that the break of this support level may not be as strong as they anticipated. Therefore, they may be forced to sell EUR/USD at an expensive price, but wait for a reversal in a stronger currency. in order to gain a profit.
However, the break of the EUR/USD level may take place too quickly, and there is also a risk of a break of the second support level, because EUR/USD can easily break even at its second highest point of the cycle. This would result in a rapid correction in the EUR/USD and EUR/CHF. If the break of this second support level is not successful, investors may have to wait for the third support level, which would result in a reversal in EUR/USD at the EUR/CHF and EUR/USD.
It is unlikely that the break of the third support level will be successful as the third support level of the cycle has not even been set yet. However, if investors are expecting a reversal, then they may take a risk by buying the EUR/USD at an expensive price but hold out for a break at a lower price.
Traders can expect some losses and profits as EUR/USD falls against the USD, but they should not sell the EUR at its lowest, because this may not be an effective level for the break of major resistance levels. Investors can also avoid taking long positions and short positions in relation to EUR/USD as they may not be able to gain any profit when the price falls. It is best to invest on the dips when EUR/USD is falling. This would allow them to take profits on the dips at a cheaper price and use them in the short and long term.