By: DailyForex.com
The EUR/USD pair bounce during the session on Thursday, just as I suspected it would. Quite frankly, the 1.28 level looks very supportive, and I have a hard time believing that the market is going to easily break down below it. This is mainly because on the longer-term charts you can see that the 1.28 vicinity of course is massively supportive. Because of this, even if we wanted to break it down, we would more than likely need to collect a lot of sellers in order to force that kind of pressure.
I also believe that the 1.30 level will be extraordinarily resistive. This market wants to chop around, and I believe we are now at 200 pip range. With that being the case, I feel that this is a short-term traders market, and the extreme lack of clarity out of Europe certainly is not helping. Granted, the market has completely forgotten about Europe it seems, but it's only a matter of time before something comes out and we rocket out of this range. I think until we have that headline cross the wires, this is going to be a market that's traded in hours, not days.
Summer range
I think that perhaps we are going to find that the summer range will be between the 1.28 handle, and the 1.32 level. In the middle, there will be the 1.30 handle that will be the "fair value" going forward. Because of this, you may get the market trading in these two separate blocks, and just shopping around for the next couple of months. As liquidity dries up over the summer, there simply won't be a reason to trade this market for anything more than a quick term trade.
With all that being said, we will have to watch the headlines coming out of Europe, and the Federal Reserve. After all, there is a lot of concern that the Federal Reserve may decide to shrink the quantitative easing program to soon, which of course will drive a lot of money into the US dollar. Ultimately, I feel that this market has a negative tone to it, but the 1.28 level is historically talk to break down.
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