The EUR/USD pair fell on Tuesday, but bounced off of what I perceive as a nice uptrend line. However, Wednesday of course was Christmas, so therefore there was no trading. That being said, I believe that this trend line should continue to support the market of it, as we trying to reach the 1.38 level again. After all, the market has been a little bit more bullish of risk assets in general lately, and as a result I believe that the Euro will get a little bit of a bid.
The real question of course is how much longer can it last? With that in mind, I would expect this to be a short-term move with a lot of noise all the way up to the 1.38 handle, which of course will be overly resistive. That’s an area that has kept the market down several times now, but as you can see the lows are getting higher, which is the epitome of an uptrend trying to form. With that in mind, I am bullish of this market, but recognize the fact that getting above the 1.38 handle is going to be very difficult in the short-term.
Lack of liquidity will probably be the US dollars best friend.
The holiday lack of liquidity will probably be what keeps this market from breaking out over the next several sessions. Nonetheless, I would expect to see a generally upward bias in this market as we continue to try and go to the upside. A break of these hammers would be something to pay attention to, as it gets in the market back down the 1.35 over the short-term. I believe there is quite a bit of support right around there, and possibly even extending all the way to the 1.36 handle, so any pullback should be very short-term in nature at best. Expect choppiness going forward, and it will probably be the second week of January before we see any real clear-cut signals in this market. After all, most traders are worried about holidays, and less about the Euro at this point in time.
