The EUR/USD pair had a slightly negative session on Tuesday, but as you can see we are essentially hanging around the 1.36 handle. I believe that this area is going to be supportive, and I don’t think that the pair will fall much lower, at least between now and the nonfarm payroll numbers. There are a couple different moving parts to the equation at the moment, but I think that this market essentially is going to come down to whether or not the Americans can produce enough jobs to have the participants believe and potential tapering.
That being said, I believe that this market will continue to be choppy as it has been for some time. And that there won’t be any real clarity for a wild. After all, we need to try to “read the mind” of the Federal Reserve, while deciding whether or not the European Central Bank is going to do something about the potential deflationary issues in the European Union.
More of the same.
This used to be the pair that everybody loved to trade. Part of it was based upon the fact that the spread is so low, and therefore it attracts a lot of new traders. However, if you look at the longer-term charts you can see just how erratic this pair has been for some time, and it appears that we are going to see more of the same, at least over the next couple of months. What we need is some type of definitive move in one direction or the other by one of the central banks. The biggest problem was that the Federal Reserve announced that it was tapering slightly, but in the same breath mentioned that the interest rates are going to be low for longer than originally anticipated. In other words, they did something, but basically punted in the end.
All things being equal, I believe that the consolidation area will be roughly between the 1.3550 level on the bottom, and the 1.38 level on the top. I think that any move to one of the extremes that shows either support or resistance could be a buying or selling opportunity. Beyond that, expect a lot of noise.
