The EUR/USD pair is one that has caused a fair amount of irritation for a lot of my trading friends. This is a pair that features one economy that is officially in recession, and another one that is trying to throw itself into one.
The United States has a lot of issues going on at the moment, and the fiscal cliff discussions are paramount currently. The Friday session saw a handful of congressional leaders giving a press conference announcing that they were getting along. This is great, and they even suggested that they were willing to give ground to each other. However, the Congress hasn’t earned an 8% approval rating for no reason! This is why I am certain that it is only a matter of time before someone says something disruptive. (And by disruptive, I mean stupid.)
This love fest that the members of both the House and Senate performed on Friday was enough to put a bit of a bid into risk assets during the session, and as a result the Dollar gave a bit of ground to many other currencies, including the Euro.
Range bound
The EUR/USD pair seems to be “stuck” at the moment, and as a result a lot of people are losing money. The first question you need to be aware of is if there is a trend. It is difficult to discern one in this pair, but there is a real chance that we are in a consolidation zone, but with a ton of moving parts.
In fact, I see the 1.27 level as support, and the 1.28 level as resistance at the moment. The area above there is a mess of noise all the way to the 1.3150 level. I believe that there is a real shot at trying to get above the 1.28 level, and run to the 1.3150 handle. The area is messy, but the biggest problem I have with trading this pair is that there are simply far too many headlines that can come into play, and simply throw a spanner into the works. With that being said, if you feel it necessary to get involved, keep tight stops in place.
