The EUR/USD pair rose during the session on Thursday as traders came back from the Christmas holiday. What I find most interesting though is the fact that I had drawn an uptrend line on this chart a couple of sessions ago, and it appears that we are in fact honoring it. If that’s the case, we should see a slow grind higher, targeting the 1.38 handle before it’s all said and done. The real question then becomes whether or not we can break out to the upside from that point.
I believe ultimately we will, and we will more than likely aim for the 1.40 handle. Above that level, things get a little bit overextended in my opinion, and that’s probably not a move that will see anytime soon. I believe that this market will continue to grind its way higher, not necessarily flow. On top of that, I think it will be very difficult for this market to break out above the 1.38 handle between now and New Year’s Day, so I think short-term traders will probably be the ones involved.
Employment numbers in January
I believe that the employment numbers out of the United States in January will be very significant, and if they proved to be fairly strong, that could reverse the market as it shows the fed more likely to taper off again. However, between now and then there’s really nothing to pushes market in either direction and it just naturally looks like it wants to float higher. With that being the case, it’s probably easier to simply take that short-term trade, and walk away from it, collecting 100 pips or so.
The 1.35 level down below is what I believe is the “floor” in this market, and therefore a really have a hard time believing that this market will break down below it, although I think if we break down below the uptrend line, we could see a significant move lower in the short-term. Ultimately though, I think this is simply going to be a short-term traders market regardless, as liquidity is going to be an issue.
