This pair is going to be interesting, because the 1.3 level is so crucial for the longer-term move. As we are near its, it makes sense that the markets will be rather choppy and difficult to deal with. Ultimately, I do think that the market will find its way higher, but we may have a serious pullback to deal with first. I like the idea of following oil, and I do think that oil will eventually break down. If oil breaks down, that typically puts upward pressure on this market. However, during the day on Wednesday we got less than impressive retail sales figures out of the United States, and that of course put downward pressure on the greenback.
I also recognize that breaking above the 1.30 level will be very difficult to do, so we need to keep an eye on that level, because once we do I feel that this market will probably take off. There is a lot of noise above, so it’s going to be noisy regardless of what happens but at this point I would have to say that the tenacity of the US dollar bulls has been rather impressive. I think that the 1.28 level underneath is the “floor” in the short-term move, so if we can stay above there I think the buyers will return. The alternate scenario of course is a breakdown below that level, and that probably opens the door to the 1.25 level longer term. Either way, this is going to be very choppy market of the next couple of sessions.
Written by FX Empire