The EUR/USD pair had a very volatile session on Monday, essentially banging around in a fairly sizable range, but at the end of the day gaining just a slight amount. Part of this would been triggered by the comments of Janet Yellen, who suggested that perhaps the Federal Reserve would have to continue supporting the economy. The markets of course read this as a potential extension of quantitative easing, but as there are varying opinions in the market, it makes sense that we simply couldn’t gain traction in one direction or the other.
However, I do think that the 1.37 level should continue to offer support, and as a result I think that we probably will go a bit higher from here. That being the case though, I am a bit hesitant to get involved in this market simply because there are so many moving parts at the moment. Quite frankly, there are easier pairs to trade at the moment, and I see a significant amount resistance right around the 1.38 level as well. So that being the case, why get bothered with it?
Continued choppiness, long-term trades almost impossible.
I just don’t see an opportunity to trade this market for anything more than a short-term scalp at best, and certainly not any type of trade that would last for any real length of time. I believe that the fact the market sold off so hard after gaining so much tells me simply that there is a significant amount of resistance. That significant amount resistance tells me that there are enough people negative of the Euro to make it was impossible to go long. However, I see a ton of support just below, so I am a bit perplexed at the moment and perfectly content to admit that.
If we managed to break down below the 1.37 level on a daily close, I think at that point time the market could fall to the 1.35 handle. On the other hand, if we managed to break above the 1.3850 level, I think we will probably grind up to the 1.3950 handle at that point.
