The EUR/USD pair did very little during the session on Wednesday, as we continue to hover above the 1.32 support level. In fact, I believe the 1.32 support level is crucial in determining whether or not this pair can hold high levels at the moment. If we close below that level, I fully expect to head back down towards the 1.28 handle, and possibly lower. Without a doubt, it will be headlines coming out of the Federal Reserve that would push his pair down. After all, the Europeans are just now coming out of a wicked recession, which should be fairly strong for the Euro. However, we are not seening that and it's obvious to me that the markets are focusing on Washington DC, not Brussels.
Going forward, I see the 1.34 level as resistance that had to be broken above in order to start buying again. Granted, short-term traders will more than likely be happy with this 200 PIP range, but the fact that we are at the very end of the summer tells me that the true money players are out there and it's very likely that moves will be erratic at best, and choppy will be the norm.
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This will be headline driven pair, much like the rest the Forex market. The only thing that matters to traders right now is the Federal Reserve, so quite frankly that's the only thing you can bank on. With that being the case, it's almost impossible to trade this market for anything more than a short-term scalp, which could be the best way to play it to be honest. I'm not a big short-term trader, but that seems to be about all that this market is offering as far as clarity is concerned.
Going forward, I do think we will get that breakout, but it will be during the month of September. Even if we break down below the 1.32 handle, I don't think we would hit 1.28 until the Federal Reserve actually announced that it is in fact going to taper off of quantitative easing.