The EUR/USD pair tried to rally during the course of the day on Thursday, but as you can see struggled to hang onto the gains and therefore formed a shooting star for the second day in a row. With that, it looks like the selling pressure reenters the market every time we rally, so therefore I feel it’s probably best to sell short-term rallies going forward, as the market continues to look soft and that the 1.33 level continues to be the support that the market is concentrating on.
A break down below the 1.33 level would of course be very negative, as it is such significant support and the fact that it has been important several times over the course of the last couple of years. I believe that a move below there more than likely will send this market looking for the 1.30 handle, which is even more supportive in significant so I think it makes sense that we try to aim for it.
The ECB could possibly ease its monetary policy.
The European Central Bank is expected to ease its monetary policy over the course of the next couple of months, mainly because of the less than stellar economic numbers coming out of the continent. The Germans are starting to cool off, and as a result I believe that the Euro will in fact continue to soften over time. On top of that, the Federal Reserve is expected to continue tapering off of quantitative easing. With that, the US dollar should continue to strengthen overall, and as a result this pair should continue to favor the greenback.
I do think that rallies will happen occasionally, but as we’ve seen over the last couple of sessions, it’s obviously going to be an opportunity to sell, and I don’t think there’s any possibility of going long of this market until we clear the 1.35 level on at least a daily close. I don’t think that’s going to happen anytime soon, so I really don’t have any significant interest in buying.
