The EUR/USD pair fell during the course of the session on Tuesday, but still remains above the 1.35 support level. Because of this, I don’t necessarily think that we are breaking down quite yet, rather we are simply going sideways at a massive support zone. However, do not think that I am not wanting the 1.35 level very closely. Quite the contrary to that, I believe that this level will determine what happens for the rest of the summer in the Euro.
With the Federal Reserve releasing the FMOC minutes this week, it could be the cause of the move lower if the Fed suddenly looks hawkish. That being the case though, I think the market may do very little until we get that announcement. Ultimately, it really comes down to what the market plans on doing in reaction to any quantitative easing plans, or lack of, by the Federal Reserve.
Summer range?
The other scenario that I have for this market is that we could be getting ready to see a bit of a summer range. That’s not uncommon for the summertime in the Forex markets, and I see a very significant chance of the 1.35 level holding, and the 1.37 level above causing quite a bit of resistance. That is a 200 PIP range, so it does give us the opportunity to trade this market back and forth on short-term charts if it does in fact turn out to be the way the summer works out.
In fact, I actually prefer a nice range bound market for a couple of months as its essentially easy to trade. We’ll have to wait and see, because there are always potential headlines out there that can move the markets. At this moment time though, I really don’t feel the need to be involved in this market, at least until the FMOC releases the minutes. At that point time, it’ll be interesting to see how the market interprets any announcement, and at that point time I think we will understand what we’re going to see this summer. If we do break down, I expect the next major support level to be at roughly 1.33 or so.
