The EUR/USD pair fell during the bulk of the session on Tuesday, continuing to show weakness that we have seen for over a week now. However, I am a bit hesitant to be involved in this market right now, simply because I don't see a buy signal, I certainly see a ton of support just below current levels. In other words, I think that we're going to see yet more choppiness in this pair.
Looking at the various stock exchanges around Europe, I cannot help but notice they all look completely broken. I believe that money is leaving Europe in droves at the moment, but in reality there is so much noise below that I find selling here would be very difficult to do. In fact, I believe that a bounce and weakness shown shortly thereafter would be the best trade possible. Because of that point time, you have the ability to pick up momentum to the downside.
Central banks
With the Federal Reserve looking to escape its quantitative easing prison, there is a possibility that the US dollar will continue to grind higher in value against most currencies. However, the Euro is a bit of a special case. It seems that no matter what happens, there are always willing participants to step in and pick it up when it falls. Without being too conspiracy laden, let's just say that it seems as if the Euro does not want to fall for any significant amount of time. Somebody with a lot of money out there is willing to support it.
The hammer from the Monday session of course is supportive looking, and the fact that we fell towards the bottom of that yet again does tell me that we could see further weakness. However, I can make an argument for the 1.30 level to be supportive. And because of that I find that this market is simply going to be difficult to trade except for possibly selling those rallies mentioned above. Beyond that, there really isn't much to do in this marketplace in this is typical summer trading.
