The EUR/USD pair fell initially during the session on Tuesday, but as you can see the buyers stepped in yet again to push market higher. This market formed a hammer, and we now are pressing up against the 1.34 handle, an area that I had recently suggested was pretty important. I believe that there is a significant amount resistance between here and 1.35, and that the move higher is going to struggle a bit in this general vicinity.
However, it's difficult to ignore the fact that we continue to grind higher, even if it's a bit of a struggle. My suspicion is that this pair will continue to be difficult as far as giving any type of fluid move until the Federal Reserve makes its decision on quantitative easing. This pair will certainly have a massive reaction to that, as the Euro is considered to be the "anti-dollar” by a lot of traders out there simply put, if the Federal Reserve does taper off, this pair will absolutely collapse as the US dollar will gain massively in value. On the other hand though, if the Federal Reserve doesn't taper off of quantitative easing, that will be absolutely horrible for the value of the US dollar, and this pair will skyrocket. This will be compounded by the fact that the European Union has just exited a recession, so there's absolutely no reason to think this pair would go much higher.
Headline driven
This is the kind of market I hate the most, as it is completely driven by headlines and rumors. Because of that, expect to see a lot of choppy action going forward, and I do not expect to see any clear move anytime soon. With that being the case, I think that this market will continue to be difficult to trade, and quite frankly I'm probably going to ignore it for the most part. However, one the headlines across the wires, I believe this pair will be one of the major ones to be involved with in response to whatever the Federal Reserve does or doesn't do.
