The EUR/USD pair initially fell during the session on Wednesday, but bounced enough to form a nice-looking hammer. This hammer is just after forming a shooting star, and with that being the case the market looks as if it is ready to perhaps go sideways in general. As you can see on the chart, the horizontal line drawn at the 1.32 level represents quite a bit of resistance, and as a result I feel that any bounce from here should run into significant selling pressure at that area. The area has seen quite a bit of selling pressure recently, so it makes sense that it would continue to.
The real support level is down at the 1.30 level as far as I can see, and even that is probably just a short-term support level. I believe that the 1.28 level will be what the market actually targets. The area down there I think is going to be the floor essentially, but we could get short-term bounces here and there. Nonetheless, I still look at this as a “sell rallies” type of market.
Will not bet against the US dollar.
At this moment time, I have absolutely no interest in betting against the US dollar. The US dollar has been one of the preferred currencies recently, and with the breakdown in both the Euro and the Pound, I believe that this trend will continue. On top of that, the USD/JPY pair broke above the 105 level during the session, and that of course means that the US dollar overall is being preferred over several other currencies.
Ultimately, I think that this market will still have to be played off of short-term charts, as the longer-term charts will continue to see quite a bit of noise. However, I believe that the US dollar will continue to rise in the US Dollar Index contract, and as a result this market will continue going lower as it is 40% of that futures contract. It is not until we break above the 1.3350 level that I would even consider buying.
