By: Daily Forex.com
The EUR/USD pair rose during the session on Friday, continuing to consolidate in the same general area we have been in all week. Having said that, it appears that the weekly candle has formed a hammer, and this typically means that we're going to see another push higher. The question of course is the downtrend line just above, which is the top of the descending triangle.
If we can get above that descending triangle downtrend line, that would signify that the Euro would continue to appreciate over the longer term in my opinion. On the other hand, if we do break down, that would be a very negative sign for this pair, and probably will send it down to the 1.28 handle which of course is the bottom of the descending triangle itself. Whether or not we can get through that area might be a completely different question, but in the end I feel that this is all going to be predicated upon the Federal Reserve and whether or not it decides to taper off of quantitative easing in the next month or two. If it does, you can expect this pair to get hit hard as it would certainly be a dollar positive event.
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To be honest, I don't expect a whole lot in the way of fireworks in this pair for the next couple of weeks. I could see us entering a very quiet time as the markets try to decide or better yet, decipher what the Federal Reserve is going to do. In the meantime, expect a lot of volatility and therefore very difficult trading conditions. I personally am not trading this pair at the moment, but would have to sit up and take notice if we broke above the 1.3350 handle, which of course would be very euro positive, or below the 1.3150 level which would be very euro negative. Besides that, I feel that there's not a whole lot to do in this pair even if your a short-term trader. The conditions are just far too choppy to be bothered with at the moment.