EUR/USD Treads Water in Slow Week

By: Christopher Lewis

The week between Christmas and New Years is without a doubt one of the quietest in the Forex markets. The fact is that the majority of traders are gone for both holidays as well as Hanukkah. With so many people away from their terminals, the major firms are being staffed by junior traders that simply do not have the authority to place new trades in the same ways that the senior ones are.

With this in mind, to expect large moves is probably going to be hard to do. The EUR/USD pair has been sitting just above the 1.30 level for two weeks now, and the level is likely to hold going forward for the next several sessions. The area is a massive support area that goes all the way down to the 1.29 level, and the area is likely to see significant buying as we attempt to break through it again.

The year has seen a market that remained almost unchanged. The yearly candle is set to make a massive shooting star, and the sentiment towards the Euro is absolutely horrible. The idea that the pair should fall is almost universally accepted, and one has to think that it will more than likely be sold off when the traders get back. The area below is vital, and if it can be broken, we could see much lower prices in this pair.

On the upside, there are numerous resistance areas to chew through for the bulls. The 1.33 level is the first one, followed by the 1.35 level. The rallies have all sold off recently, and as such there is no real reason to fight the trend. However, as mentioned above, the 1.29 level is going to be a true sign of a breakdown in this pair.

Until the European Union gets a handle on the debt crisis, there is little chance that traders are going to be buying the Euro en masse. The pair is a great barometer of economic confidence, and there is still a lot of uncertainty in the global markets currently. I am presently sitting here and waiting to see the 1.29 handle broken so I can sell and hold this pair going much, much lower. I could change my mind, but only if we see this pair rise above the 1.35 handle, showing a change in sentiment.