The EUR/USD pair fell during the session on Monday, as we continued the sideways overall movement that we’ve seen in this market. I believe that this market should continue to find plenty of bearish pressure in general, and as a result I am still looking sell rallies. However, there hasn’t been much in the way of a rally yet, so I am still on the sidelines. With that, I believe that the market will continue to go sideways in general, and as a result I will more than likely stay out.
Ultimately though, I think that the 1.35 level is massively resistant, and the market will struggle to get above there. I would love to see some type of resistant candle in that general vicinity, and as a result would become aggressively short of this market. If that happens, the market should see quite a bit of selling pressure enter at that point, and I believe ultimately we will continue to go down to the 1.33 level, an area that I see as massively supportive below. In fact, I think that the area is much more important than the 1.35 handle, and as a result the market will search it out.
Choppy summertime condition should continue.
I believe that the choppy summertime condition should continue, as the markets will lack any clear direction for a wild. August this one of the thinnest months as far as liquidity is concerned, so the fact that we don’t move much during the course of the month would be pretty typical for late summer, as large traders step away from their desks and head holiday.
Going forward, I think this is simply going to be a battle of two central banks, and ultimately a lot of traders out there believe that the US dollar will strengthen. I think if we can get below the 1.33 level that could be a very negative sign for the Euro. On the other hand, if we break above the 1.3550 level, I think that the market will almost have to go back to the 1.37 level.
