The EUR/USD pair fell hard during the session on Tuesday, finally breaking below the 1.35 support region. With that, I feel that the Euro will continue to weaken and as a result I shorted it during the day. Ultimately, I think this opens the door to the 1.33 handle, which is supportive as well. I don’t know that we can get below there, because quite frankly we would need something very bearish to come over the Euro, and a very positive to come over the Dollar at the same time. This market doesn’t work like that, it seems like we simply go back and forth between headlines or short-term concerns. This has become one of the more difficult pairs to trade in my opinion, as high-frequency traders are starting to absolutely ruin it.
Ultimately though, I think that the 1.33 level can be reached, it’s just that we may have a couple of bounces between here and there. This pair does tend to jump around a lot anyway, so that wouldn’t necessarily be much of a surprise.
Selling rallies as they appear.
I will sell this pair again and again all the way down to the 1.33 handle, using short-term charts to sell rallies as they appear. I just am not willing to hold onto a longer-term trade, simply because they just don’t happen very often in this market. On top of that, we are heading into the summer market, which of course is a much quieter affair typically.
However, there is the possibility that some kind of news out of Ukraine could affect the Euro, but I doubt it will be anything long-term. If the European Central Bank does something to loosen monetary policy, that could accelerate the move, but ultimately I believe that the market is already expecting something along the lines of lending rates. It doesn’t really matter though, this is a very tightly controlled market at times, so really don’t see big moves. I will probably short this market for 20 to 30 pips at a time, until we get down to the 1.33 handle.
