The EUR/USD pair initially fell during the course of the session on Friday, but found enough buying pressure underneath to turn things back around and slammed into the 1.10 level. This is an area that is essentially an “on/off switch” as far as I’m concerned, simply telling me that I should be the buying this pair if we are above the 1.10 level, and selling it if we fall from here. However, I’m not willing to start selling right away, as I would need to break down below the bottom of the hammer from the Wednesday session in order to be comfortable selling.
The weekly chart ended up forming a hammer, which of course is a very bullish sign as well. If we break above the 1.10 level, I believe that this market should then go to the 1.1450 level, and as a result could be a nice opportunity to go long of the Euro. If we can break above the 1.15 level, I feel that the trend will have completely changed, and then it becomes more or less a “buy on the dips” or a “buy-and-hold” type of situation.
Lots of noise
There’s lots of noise in this market regardless, and as a result I think you will continue to see quite a bit of volatility no matter what happens. With this, the nonsense coming out of Athens will continue to push this currency pair around, as the market keeps reacting to rumors and innuendo.
On the other side of the Atlantic Ocean, you have the Federal Reserve which seems very likely to raise interest rates sometime this year, so that should be bullish for the US dollar, but quite frankly the Euro has been sold off so much that perhaps just simple stability or at least belief in the European Union might be enough of a reason for this market to bounce significantly as the Euro has been sold off so violently over the course of the last 2 years. With that, I believe that we are about to see a rally.
