The EUR/USD pair tried to break higher during the course of the session on Wednesday, but struggled above the 1.16 level as we gave back about half of the gains. With that being said, it looks as if the market will continue to struggle every time we rally, and offer a nice selling opportunity on those short-term rallies. Ultimately, the market still has to break down below the 1.15 level to show a longer-term selling opportunity, but I still believe that it will happen given enough time.
Ultimately, I think that there is a significant amount of resistance above, starting at the 1.18 level. That extends to the 1.20 level as well, as I think of it as a “zone” of resistance. That resistance should continue to keep the market down, especially considering how bearish the entire world is on the Euro at the moment.
ECB press conference
Expect a lot of volatility in this pair as the European Central Bank has an interest rate decision today, as well as the press conference. The press conference will be what people pay attention to the most, simply because they need to see whether or not the Europeans will continue to adjust quantitative easing. Right now, it appears that the ECB is expected to expand monetary policy, but at this point in time we have to look at this chart as one that is sitting on significant support.
On top of that, the ECB is normally a bit less likely to expand its monetary policy than other central banks, as it normally is behind the curve. It’s not quite like the Federal Reserve, which will loosen monetary policy at the drop of a hat. Because of this, the Europeans could disappoint the market and perhaps actually drive up the value of the Euro by extension. Nonetheless, I look at any rally at this point in time as a potential selling opportunity going forward. Just be aware the fact that there is going to be a lot of volatility during the session today as the important announcement comes out.
