The EUR/USD Rally is a bullish indicator that indicates that the EUR/USD is heading towards overbought territory for the third time this year. The EUR/USD is currently trading at an overbought/oversold level in its chart. It is possible that a break to overbought territory could lead to a new high for the EUR/USD.
The EUR/USD Rally is being pushed by Paulson & Co. and the EUR/USD Forex Market is the biggest of its kind to hit the market in a long time. There are many reasons that the EUR/USD Forex Market is trading at an overbought/oversold level and all of them point to a reversal in currency trends.
In recent days, Paulson and other international currency investment companies have taken out massive, unprofitable positions in the currency markets. The European Central Bank has also tightened its monetary policy in an effort to boost the euro exchange rate against the dollar. A strong euro exchange rate is the result of increased European exports.
Many investors are taking out EUR/USD positions, primarily because the Eurozone is in crisis and the EUR/USD Forex Market is the biggest of its kind in Europe. The European Central Bank has tried to stimulate the euro area by reducing interest rates, increasing spending, and creating more money to buy assets in the region.
This effort has failed to create a positive impact on the European economic situation. Europe is suffering from a double whammy; the euro exchange rate is now on an overbought/oversold range and inflation is on the rise. This is a double whammy for those who are speculating in the EUR/USD Forex Market.
The EUR/USD Forex Market is likely to break out of this overbought/oversold range in the second half of the year if the European Central Bank and European Union remain determined to implement further economic stimulus measures. This would likely prompt a second round of EUR/USD Forex Market rallies. If the market breaks out of this overbought/oversold range, the EUR/USD is likely to enter the overbought/oversold range and enter the correction phase.
In the corrective phase, the market will begin to show some upward pressure on the EUR/USD and the correction phase will be completed. If the correction phase is completed and the market moves back down, then the EUR/USD is likely to enter a correction phase.
It is possible that the EUR/USD will enter into a correction phase in the second half of the year. It is also possible that the EURUSD will break out of its correction phase and enter a long-term uptrend.