During the session on Tuesday, the EUR/USD pair initially tried to rally but fell again as the market simply cannot build up enough momentum to continue going higher. This makes a lot of sense though, because the FOMC Statement comes out later today, and that of course will have a massive effect on the US dollar in general. Remember, the Euro is essentially the “anti-dollar”, so this market will be greatly influenced by what that statement says. If the Federal Reserve continues to show dovish this, we could see the Euro rally but then again at the same time we have the European Central Bank suggesting stimulus could come. At this point time, it looks like it’s going to be a fight between 2 lightweights again, which leads to a lot of volatility.
Uptrend line
On the longer-term charts, I have an uptrend line intersecting at roughly 1.10 at the moment. This is the bottom of an ascending triangle that I think is quite important, and if we break down below that I don’t see a reason why the market will go down to the 1.08 handle. On the other hand, if we bounce from here we could continue to try to go higher, with the 1.11 level above being somewhat resistive, so I think that it is probably safer to buy this pair above that level and aim for 1.13 at the moment.
This is a market that seems a bit confused, even though we sold off drastically last week but let’s face it: that was essentially a reaction to a few words out of Brussels that hasn't even been acted upon yet. Yes, I think the ECB would add more stimulus if it needed to, but this point in time are still stuck in this currency war between the 2 central banks. I don’t think that can change anytime soon, so the one thing you can count on is volatility. Long-term moves are almost a thing of the past at this point in time.
