If there is a currency pair out there right now thath I could absolutely put to sleep, it would be this one. Quite frankly, the Euro has been given a pass on so many things that this market simply doesn't have much volatility overall. While we do get choppiness from time to time on a daily basis, in reality if you look at the longer-term charts, we've gone nowhere. That being said, the Thursday session was the quintessential market action in this market over the last several months. We simply went back and forth, chopped a lot of people up in the process, and ended where we started.
Many of my friends who trade for a living have simply given up on trading this pair for the time being. It is the most liquid pair in the world granted, but in reality it also comes with a lot of headaches. On one hand, you have Europe which of course is falling apart it seems at times, while the United States has the Federal Reserve printing as much currency as humanly possible. That being the case, the Euro simply cannot fall as much as it rightfully should, because the Federal Reserve does what it has always done: worked feverishly against the value of the US dollar. Don't believe me? Think about this: the value of the US dollar is roughly 2% of what it was when the Federal Reserve was created.
It wasn't until recently that the Europeans suggested that they were willing to play the game that so many of the central banks around the world are currently involved in. Because of this, the Euro got a little bit of a reprieve as well, and it's starting to hurt European exporters. German reports of GDP were weaker than expected, and that of course will spook the market. After all, Germany is essentially what people are betting on when it comes to the Euro.
Going forward, I expect that this pair can only be day traded at best. I see the 1.2850 level below as the beginning of significant support down to the 1.2750 area, which of course makes shorting this market a bit difficult. On the other hand, I have a hard time believing that this market going to go above the 1.30 level easily in this environment. It just simply seems "stuck."
