Navigating where the EUR/USD might be headed to next

Looking at the price action in the EUR/USD so far today and since last week, we have a range covered by 1.0778 to 1.1144. The range today has remained camped well inside that and it is covered so far by 1.0882 and 1.1050. That high was seen earlier this morning as the European stock markets reopened deeply in the red. Since then it has fallen back to 1.0937. One thing is clear and has been pointed out before- stock market volatility has spilled over into the FX markets, but by comparison not by very much in real terms. Were we to get say 6-10% swings in currencies we would be talking about moves the size of which have not been seen in more than a decade. However, whilst absent now, it is not beyond the bounds of possibility we may get that, if the suspected currency war does eventually break out. It is on the back burner for now, but not out of the running at some stage. The Dollar looks more at risk than the Euro right now, but it is far from clear which way this is headed. That uncertainty explains the price action since Thursday. The first clue that the dollar will really and truly give way will be a break above 1.1214 on the EUR/USD. If on the other hand it busts below 1.0700 from there, then all the bets might be headed in the other direction. I wished I could be more definitive than that, but right now that is where we are. The EUR/USD is right now at 1.0947