- The EUR/USD currency pair has rallied slightly during the trading session on Wednesday as it looks like we are trying to do everything we can to break above the 1.09 level.
- By doing so, it opens up the possibility that we breakout to the 1.10 level, but we have the Federal Reserve meeting next week that will probably cause quite a bit of noise.
- The Euro of course has been a beneficiary of the more likely than not hawkish ECB, and the delusion that the Federal Reserve is suddenly going to loosen monetary policy.
The 1.10 Price Level Is the Target
You could make an argument that we are forming a little bit of a rising wage, but I think that’s a bit of a stretch at this point. I think the most important thing to pay attention to is that we are a little bit overdone to the upside, so a pullback would make a certain amount of sense. However, if we break above the recent highs, then 1.10 will be targeted rather quickly. Breaking above that opens up the possibility of a move to the 1.11 handle.
Keep in mind that the Euro does tend to be very choppy and noisy, so expecting a clean move is probably going to be a bit much to ask out of this currency pair. On the downside, I believe that the 1.08 level is going to be important, and if we were to break down below there, we could really start to see a significant selloff down to the 50-Day EMA near the 1.06 level. In general, this is a market that I think continues to be very noisy, and therefore you need to be cautious about getting to overly aggressive between now and the Federal Reserve meeting. Eventually we get the meeting to come and go, and therefore we would see a little bit more certainty when it comes to at least half of the equation.
I think you are probably going to be forced to trade short-term charts in this market. Ultimately, we will get a better decision but right now we just don’t have the clarity necessary to get aggressive and I think that’s probably going to be the story for about another week or so as we await Jerome Powell and his statement after the interest rate hike.
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