The EUR/USD pair went back and forth during the session on Thursday, but found the 1.35 area to be supportive again, and as a result it's difficult to imagine shorting this market going forward. In fact, I think that even if we fall lower, the 1.34 area will continue to be supportive as well. That being said, the candle does look somewhat like a hammer, so it is possible that we do see a bounce directly from this point.
If we break the highs for the session on Thursday should send this pair back up to the 1.36 level, and as a result we could end up being in a relatively tight consolidation area for the short term. However, I do believe that we eventually break higher, and eventually even go as high as 1.40 before it's all said and done. However, we need to get above the 1.3650 level in order to feel comfortable to start buying and hanging onto the trade.
The Federal Reserve looks to be easy longer than most people think.
I cannot stress how dovish the Federal Reserve being led by Janet Yellen could be. After all, she has consistently been very dovish, and this of course is going to be poor for the US dollar. On top of that, the Euro is considered to be the "anti-dollar”, and as a result it makes sense of this pair would continue to go higher if the Federal Reserve looks more and more dovish.
Truthfully, it's difficult to short this pair at all considering that the 1.34 level should be so massively supportive. On top, the 1.35 has obviously been supportive also. The 1.40 level is the next natural area where the market will be gravitating towards, so if we do get some type of bearish sign for the US dollar, perhaps the pair would continue much higher in a quick manner. In fact, if the US government come together for some type of budgetary deal, the nonfarm payroll numbers coming out soon could be reason enough for this pair to go higher as well.
