By: Christopher Lewis
The EUR/USD pair has been an interesting one of late to say the least. The pair has been in a tug of war between those who worry about the issues in European debt markets and those who think the United States will continue to ease monetary policy. The answer may have come on Monday as Ben Bernanke suggested that the low interest rates would continue for a long time. The recent speculation of traders has suggested that perhaps the Fed would have to start raising rates before initially thought, and as such the Euro had been struggling.
The comments were a direct rebuttal to the suggestion that the Fed would be forced to act by raising rates. In fact, it now appears that the Fed will more than likely cause yet another bubble as the world’s economy seems set for a boom and bust cycle.
1.3250 gone…..
The 1.3250 level was considered a potential trouble area for the bulls. At the outset of trading on Monday, it looked as if it was going to hold yet again. In a few short moments, Mr. Bernanke changed that. The level giving way suggests that we are most certainly going to see a run to the 1.35 level. However, this is just a short-term move, and I feel that even with this new development there could be many twists and turns in this pair going forward.
.png "EUR/USD Daily 3/27/12")
The candle for the session on Monday is a hammer-like shape, and the 1.3250 level now appears to be a support level. The reversal was sharp, and this does suggest that we will see continued strength. In the event of a pullback, I will be buying for the short-term on a supportive candle. I will more than likely be basing it off of a shorter timeframe as well, perhaps the 4 hour chart. I would also consider buying on a break of the top of Monday’s range, and am aiming for just under the 1.35 level. I believe the 1.35 level will be serious resistance and could pose a real fight. Because of this, I am a bull, but for the next couple of handles only.