The EUR/USD pair got a boost during the session on Thursday as US numbers came in weaker than anticipated. That being the case, it appears that we are heading towards a collision with the downtrend line yet again and this could be the push to finally breakout. On a daily close above the 1.34 level I believe that this market has broken out, and at that point time I would be more than willing to buy it. However, we have to keep in mind that we do not know what the Federal Reserve is going to do quite yet.
The market has been paying attention to whether or not the Federal Reserve will taper off of quantitative easing, and as a result this pair has moved based upon that. The concept is that if the Federal Reserve tapers off of quantitative easing, it should strengthen the value of the US dollar, which of course should drive this pair lower. However, the Europeans have recently come out of a recession, and it does make sense that the Euro would continue to gain. This would be especially true if the Federal Reserve does not taper off, which could set an explosive move up in this market.
Headline driven
Remember that this market is still going to be headline driven, and if a voting member of the FMOC states something to the effect that they believe tapering off is necessary, that could kill this rally in a heartbeat. Because of this, expect to see a lot of choppiness going forward. However, as we enter the middle part of September we should have a good read on what the Federal Reserve is doing, which of course could bring clarity to this market finally. There are a lot of ifs and buts between now and then, but there are a lot of different things that can move this pair. One thing is for certain, the Thursday session does indeed suggest that this market wants to go higher. That being the case, I am inclined to believe that will happen.