The EUR/USD pair try to rally during the session on Friday, but you can see that the 1.37 level offered far too much in the way of resistance, making the market fall and form a shooting star. The shooting star of course is a rather negative, and with that I believe that the market is ready to pull back, and should more than likely continue the consolidation that we’ve seen over the last couple of weeks. The larger consolidation area of course extends all the way to the 1.38 level, but the tighter consolidation area that is of more immediate concern lies between the 1.35 level on the bottom, and the 1.37 level on the top.
This market has been choppy for quite some time, and I don’t see anything that’s going to change that anytime soon. Granted, Wednesday is the FMOC statement, and that of course will have a great effect on the value of the US dollar, but in the end I don’t see anything in this chart that makes me believe that we will break out.
The FMOC will determine the next move, with possible consequences.
The FMOC could in fact break this pair out, but I don’t think that the Federal Reserve is quite ready to get involved in the marketplace right now, simply because the jobs numbers have been weak over the last month or two. With that, I believe that the Federal Reserve has too many concerns to get involved at this moment, but the market will certainly be paying attention to any comments to come out of members and their statements.
On a break above the 1.38 level, I think that this market goes to the 1.40 level, but will have a significant amount of noise. Because of this, it’s almost impossible to hang onto a trade above there, unless of course you have serious conviction. On the other hand, if you break down below the 1.35 level, this is a market that could really start to break down at that point, aiming for the 1.33 level.
