The EUR/USD pair continues to grind away out the 1.12 level, as the Friday session initially saw quite a bit of buying but things turned back around to form a pretty negative looking shooting star. The shooting star sits on supportive the 1.12 level, and as a result I feel that the market may have to pull back a little bit from this area. If you look at the recent surge higher, it wouldn’t be much of a stretch of imagination to think that we may need to go lower to pick up more buyers to continue the momentum higher.
I still see a significant amount of support near the 1.10 level, as it was once massive resistance. Because of this, I feel that a pullback to that area should attract a lot of buyers, as the market tries to break out to the upside. It is not until we clear the 1.15 level that I think the longer-term trend can continue much higher.
Expecting more volatility
I expect to see more volatility, because the situation in Europe is so messy. However, the economic numbers are starting to get a bit better, so we could see a higher value Euro, even with all of the problems in the debt markets and of course Greece. At the end of the day there are still major concerns when it comes to Greece especially. It sounds like a bit of a broken record, but the truth of the matter is that the Greece situation has not been solved, and it has simply been one Band-Aid after another.
I think that there will be quite a bit of resistance all the way to the 1.15 level, so any rally will face quite a bit of pressure to the downside. However, I think that until we get below the 1.10 level, you have to believe that we will eventually break out to the upside. Because of this, I am bullish but not exactly excited.
