The Euro initially fell against the Australian dollar on Wednesday, but we bounced off of the 1.45 level below. With this being the case, the market ended up looking very supportive, and as a result we ended up going all the way up to the 1.4750 level above. With this, it’s very likely that the market will see a short-term buying opportunity, but with this being the case I feel that it’s a short-term trade only. After all, the 1.50 level above is a massive resistive barrier based upon not only the large, round, psychologically significant number, and of course an area that we had seen action out previously.
I believe that the Euro got a little bit of a reprieve during the course of the day on Wednesday after the FOMC Statement, but at the end of the day it’s likely that gold markets will turned back around and go higher given enough time. This of course has an effect on the value the Australian dollar, so with this being the case it’s likely that the Aussie will gain strength.
Short-term
With that being said, I think that the Euro is a little oversold, and of course the 1.45 level has been a very “hard floor” in this market. With this, the bounce is expected and reasonable, but I feel much more comfortable selling this pair over the longer term. I recognize that a move above the highs from the last several candles could be reason enough to go long, but at the first sign of weakness or exhaustion I would be bailing and perhaps even shorting at that point. It’s not until we get above the 1.50 level on a daily close that I would consider buying for any real length of time. Because of this, I think that the EUR/USD pair offers a nice short-term trading opportunity with a longer-term direction that you can turn right back around and start following.
