The EUR/USD pair rose during the session on Tuesday, solidifying the idea that perhaps we are starting to see enough buying pressure to breakout to the upside. We still need to see the daily close above the 1.36 level low, and as a result we don’t really have a trade quite yet. However, it should be noted that the hammer from the Monday session, followed by a bullish candle certainly does suggest that we are about to go higher. If we get that move above the 1.36 handle, we believe that this market will more than likely head to the 1.3 handle over the next several sessions.
Alternately, we could have a situation where the market pulls back, and tries to find support again, but right now it has to be said that it does not look like the sellers are facing. Any serious amount of fear as they continue to press on the accelerator and try to bring the Euro up.
The market should continue to be choppy regardless though, at least until we clear the 1.3650 handle. Is above there that the market seems like it has a little bit more of an easy trip going higher, and we also have to keep in mind that the 1.38 handle isn’t necessarily a major one, rather than the recent high. Because of this, we believe that the market will actually go to 1.40, given enough time, but do recognize that there could be a bit of resistance at the aforementioned 1.38 level.
Looking at the market, it appears that traders are starting to assume that the Federal Reserve will not be able to taper off of quantitative easing, which of course is only to be very negative for the US dollar in general. Since the Euro is essentially the “anti-dollar”, it makes sense that this pair would continue to go higher in response to what the Federal Reserve can or cannot do. It’s obvious to us that the market seems to think that tapering is not going to happen anytime soon, and because of that it appears that traders are trying to express their opinion by throwing money into the European Union.
Written by FX Empire