The EUR/USD pair fell during the session on Wednesday, breaking below the 1.36 level by the end of the day. With that, we believe that the market should continue to fall from here, heading towards a 1.35 level which should be massively supportive based upon the longer-term charts. I think that ultimately we well bounce from there, but it makes sense that with the ECB having the next meeting on June 5, it’s very likely that between now and then we will simply drift lower.
I also believe that anytime he rally between now and then more than likely see significant selling pressure, possibly based off of shorter-term charts, and most certainly near the 1.37 level, which was once significant support. There should be plenty of selling orders in that general vicinity, and that being the case I think it’ll be very difficult to break above there. On top of that, I believe that the resistance area goes all the way to the 1.3750 level, as it is more of a “zone” than a line.
European Central Bank
The European Central Bank will more than likely have a massive effect on what happens with the Euro longer-term, and as a result I would be out of this market within a day or 2 of that meeting. However, I believe that ultimately the ECB will disappoint as far as monetary easing, and with that, I believe that the Euro will find plenty of support somewhere lower which in my opinion means 1.350 or so. It just simply lines up both fundamentally and technically.
Regardless, keep trades to short-term variety only, as it’s going to be difficult for this pair to make massive moves in any one direction and for any real length of time between now and the meeting. Between now and then, there will simply be far too many people concerned about what could happen, not to mention that there will be a lot of people placing bets ahead of the announcement as they typically do. The market will be a lot of nonsense between now and then, so obviously not a place to risk a lot of money.
