The EUR/USD pair initially dipped on Monday, but found enough support at the 24-hour exponential moving average to turn around and explode to the upside. We have now broken out, as the 1.1750 level offered a significant amount of resistance. By breaking above there, we broke above the top of an ascending triangle, which is a very bullish sign. Based upon the ascending triangle, we could be looking at a move to the 1.1850 level above, which is resistance on the longer-term charts, so it does make sense. I think it will be choppy to the upside, but I certainly believe that there is much more buying pressure than selling.
The Federal Reserve
The Federal Reserve looks likely to renege a bit on the interest rate hiking cycle that it had talked about, and if that’s the case it should continue to weigh upon the US dollar in general, sending this market towards the upside as the ECB, although looking to taper itself, is much further behind in the curve, and it does not seem to be overly concerned about the rally in the value of its currency, least not yet. I believe in buying dips, and I think that the 1.1730 level below will essentially be the “floor” in the market. Longer-term traders continue to favor this market, so therefore I think it’s only a matter of time before value hunters come back into this market every time we pull back. Ultimately, this is a market that should continue to favor the buyers, as the US dollar is certainly on its back foot, and does not look like it’s going to find a significant bullish pressure anytime soon, so therefore I think this continues to be a market that will rise over the longer term.
Written by FX Empire