The EUR/USD currency pair went back and forth during the trading session on Thursday as traders still have no idea what to do about the Federal Reserve. Yes, they read the statement and press conference during the Wednesday session as being a bit dovish, but quite frankly nothing has truly changed. Ultimately, this is a market that I think will continue to be confused as the bond markets are all over the place, and quite frankly there is a huge question out there as to whether or not we are going to see economic growth.
The 1.01 level is an area that has been imported more than once as support over the last couple of days, and therefore I think we need to pay close attention to it. If we were to break down below there, then it’s possible that the market could reach the parity handle. If we break down below parity, then the Euro eventually will go to the 0.98 level. Granted, it may take quite a bit of effort to make that happen, but I do think that’s eventually how this all plays out. After all, the GDP numbers in the United States have slipped into recession, and therefore people will be looking for safety.
The European Union has a major issue with energy right now, and that does not bode well for an economy. Given enough time, I think what we have is a situation where the sellers will come in and fade this market at the first signs of a rally. If we do break above the 1.03 level, then it’s possible that we could go to the 1.04 level. The 1.04 level is an area where we can probably see a bit of “market memory”, and therefore I think a lot of resistance. The 50-Day EMA sits right there as well, and therefore it’s likely that we would see quite a bit of selling pressure. In fact, it’s not until we break above the 1.06 level that I would consider buying this market, because money talks, and so does the price. It’s not what it “should do”, but what it is actually doing that matters. On the downside, I think that a daily close below the parity level will cause a cascading effect in this market, bringing quite a bit of money into it to the downside picking up US dollars.
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