By: DailyForex.com
The EUR/USD pair rose during the session on Wednesday as you can see, breaking above the hammer that had formed for the session on Tuesday. The breakout above the 1.32 level suggests that the market is going to go higher, and as a result I feel that this market will more than likely attempt to reach the top of the recent consolidation area all the way up to the 1.34 handle. On top of that, there will be a lot of headlines that could push his market around, as the Federal Reserve more than likely will control the destiny of this market as the value of the US dollar will be pushed around by whether or not the Federal Reserve decides to taper off of quantitative easing.
That being the case, I feel that it is going to be difficult to hang onto a trade in this market, and more than likely it will be easier to simply take short-term trades to the upside. When markets pullback, we should see supportive candles that offer the capability of taking advantage of the short-term uptrend move, and because of that I believe that there will be several different trading opportunities between now and the announcement coming out of the Federal Reserve as to whether or not they're going to taper off. That means the next two weeks will be very bumpy to say the least.
Options market could be the solution
The options market could be the possible solution to this as well, and as a result it's possible that you could have several different trading opportunities under several different scenarios. Different time frames will be available as well, and being a short-term trader is probably the only direct price trading opportunity that you will have.
I believe that if the Federal Reserve does in fact taper off of quantitative easing, it will drive this currency pair much lower, probably heading towards the 1.28 level. On the other hand, if the Federal Reserve does not taper off of quantitative easing, it will drive down the value of the US dollar, and sending this pair above the 1.34 level without too many issues.
