By: DailyForex.com
The EUR/USD pair showed on Wednesday exactly why I hate trading this pair lately. You can see that we shot straight up in the early hours of the trading session to the 1.30 resistance level. I have suggested recently that the market would have trouble getting above that handle, although I have to admit that I'm surprised exactly how right I got that call!
.jpg "EUR/USD may 23")
The 1.30 level obviously was resistance, but it was certainly helped along by the Federal Reserve Chairman Ben Bernanke testifying in front of Congress during the session that the Federal Reserve could possibly begin to taper off of quantitative easing over the course of the next couple of months. This brings into play the interest rate differential in these currencies, and in a world that we see the European Central Bank possibly looking cut interest rates again, this of course would have the pair heading lower based upon that alone.
It doesn't matter, this pair is in going anywhere in the long run...
I know that some very cynical of me to say, but that's really how I feel at this point. We are heading into the summer months, in this pair will simply grind sideways unless something major happened somewhere. I do recognize the fact that this is an extraordinarily bearish candle, and of course I accept the fact that this pair could in fact begin to break down at this point. However, the 1.2750 level is significant enough on the longer-term charts and I feel it has to be broken down below before you can certainly look at shorting this pair for anything more than a scalp. If we get below that area, we really could begin to accelerate in favor the US dollar, but quite frankly this pair suspiciously looks very supportive just below where we are on the longer-term charts.
With that being said, I'm essentially observing this pair, but suspect that if I want to trade the Euro, it will be against other currencies. As far as trading the US dollar, I am bullish of that currency and will continue to buy it against a plethora of other currencies. However, this is not a very friendly market the trading at the moment, and quite frankly I see much easier trades out there in both directions.