The EUR/USD pair initially fell during the session on Thursday, but found enough support to turn things back around and form a hammer. We continue to go back and forth between the 1.14 level on the top, and the 1.12 level on the bottom. We believe that this market will continue to consolidate, so if you are short-term trader you will be able to buy and sell back and forth, but ultimately it’s difficult to imagine placing a serious trade in this pair for any real length of time. It is not until we get above the 1.15 level that we would consider holding a trade for any real length of time as it would show a market breaking out to the upside for more of a “buy-and-hold” type of feel.
We believe that the euro is finally getting a bit of a reprieve from all of the selling that we have seen for so long, as although the issues going on in Athens continue, the reality is that the Greeks are going nowhere. The powers that be will continue to keep the European Union together, and with that you have to assume that there will be some type of solution, or at the very least yet another Band-Aid placed on the market and all of the problems surrounding it.
Also, you have to keep in mind that people are now thinking that the Federal Reserve will only do one interest-rate hike, and that of course means that the US dollar might be a bit overvalued against the euro as it has been sold off so viciously over the last year or 2. With this, the market looks to try to reach above the 1.15 level. Once we get above there, we believe that this is a market that you can buy on the dips going forward, and that it is a longer-term situation where you can make real money by going long and hanging on to the marketplace over the longer term. We have no interest in selling until we get below the 1.09 level, something that doesn’t look very likely.
