The EUR/USD pair had a very strong showing on Monday, testing the 1.37 level for resistance. We did in fact find support up there, and it does not surprise me that we stopped just below that area. This area has been significant resistance lately, and as a result I think that is going to be fairly difficult to get above this area in the short-term. In fact, I am not ready to start buying until we clear the 1.3750 level, which I feel is the top of the “zone” that we are currently fighting against.
However, it’s very likely that we would find some type of support below, so if we do pullback I think that there is a possible buying opportunity on the right supportive candle. Then supportive candle could represent the basing that the market needs to do in order to go much higher.
Ultimately, we are trying to find the summer range.
I believe that we are trying to find the summer range right now, and this is essentially going to tell us whether or not it is above 1.37, or below it. If we do is above the 1.37 level, we should probably bounce around between 1.37 and 1.3950 or so. On the other hand, if we break down from here, this market will more than likely meander between the 1.35 and the 1.37 handles. I have no strong opinion one way or the other, but I do have to admit the closing towards a very top of the range is in fact a very bullish sign, so I suspect the markets trying to get above the 1.3750 level at this point.
Both central banks are going to be watched very closely over the course of the next several weeks, and with the nonfarm payroll number coming out later this week, that could be the last determining factor in where we end up for the summer, thereby giving us decent range trading for a couple of months. I really don’t see a catalyst start some type of longer-term trend at the moment.
