Despite the narrow range on the day, there is a lot to digest when it comes to looking at the EUR/USD chart at the moment. The most glaring detail is the break back below 1.0100 after the breakout above the range of 1.0100 to 1.0283 failed at the 61.8 Fib retracement level at 1.0361 highlighted earlier in the week here.
With the dollar seen firmer across the board and also making headway against the likes of the yen and pound, there is a strong argument for EUR/USD to head back towards parity in the sessions ahead.
So far, there is a lack of appetite for a strong move today but we'll see if there is any major extension to follow once US traders come into the fray. It will be important to see how price action develops from here as I fear another retest of parity will not be one where the euro fares too well this time around.
The outlook for the euro area remains bleak as recession risks are on the rise and today's record rise in German producer prices exemplifies the nature of which surging prices is taking a toll on the region. As much as euro area governments are playing down the risks, soarin energy prices ahead of winter is going to lead to a dark period for businesses and consumers.
This article was written by Justin Low at www.forexlive.com.
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