The EUR/USD pair rose during the session on Tuesday, as the German economic numbers came in a bit better than anticipated. The Services PMI reading was stronger than anticipated, and as a result the Euro jumped. However, do not forget that there is an interest rate decision and announcement coming out of the ECB on Thursday, so with this I feel that this market could struggle to go much higher until after that meeting.
With that being the case, I feel that more than likely is going to be difficult to trade this pair over the next couple of sessions, and that we will more than likely just go sideways for the most part. This market has been fairly choppy even when it has been “trending”, and as a result I feel that this market probably will be left alone by myself for at least the next couple of days and quite frankly I would prefer to see what the market does with whatever statement the ECB comes out with.
1.40 is a major level.
I believe that the 1.40 level is a major level for the markets, and as a result if we get above that level, I believe that this market would be a “buy and hold” type of situation. In fact, that’s probably the easiest trade to take, on a daily close above that level. However, the ECB has recently stated that the 1.40 level is a bit of a “line in the sand”, and that the Euro is a bit too expensive. My suspicion is that something will be set on Thursday to trying to jawbone the Euro down. With that being the case, I feel that we could ultimately see a significant pullback by the end of the week, but I see so much in the way of support below that it’s difficult to imagine it being anything permanent. Quite frankly, and less the ECB suggests that it is going to start cutting interest rates, I think this market is still going to continue to bang around in this general vicinity. Because of this, I’m really not going to be of the do much between now and Thursday.
