- The EUR/USD did almost nothing during the day on Tuesday, which would not be a huge surprise considering that the market must worry about a couple of major holidays.
- We are currently between the Christmas holiday and the New Year’s Day holiday; therefore, a lot of liquidity will have disappeared from the markets.
- Because of this, I anticipate that a lot of what you’re seeing now is just going to be Brownian motion, meaning that it is just noise that doesn’t matter in the big scheme of things.
The market is sitting above the 1.06 level, an area that has caused quite a bit of trouble, and it looks like at this point we are to simply go sideways and try to “run out the clock” between now and the end of the year. Once we get through the end of the year, the first major announcement will be the Non-Farm Payroll announcement coming out in the United States the little people will be paying close attention to. Furthermore, people need to start thinking about whether the Federal Reserve is going to be serious about keeping its foot on the brakes, which if you pay attention to what they are saying, they most certainly is going to. The European Central Bank is pretending like it’s going to be very tight for a long time, but it quite frankly cannot do it and does not have a case to make sure that pretty length of time.
Be Cautious
If we break down below the lows of the last week, then we could see this market go crashing into the 200-Day EMA, which is near the 1.0420 level, and of course, would attract a lot of attention. The 50-Day EMA is starting to race toward that area as well, opening the possibility of a “golden cross”, which is a longer-term bullish signal.
However, this is a market that I think continues to see a lot of back-and-forth trading and I think the next couple of days will continue to favor more of a range-bound short-term type of market strategy. The markets will more likely than not continue to be said, so you need to be cautious about putting too much money into the market. After all, if we get some type of shock announcement, then you could see a huge move out of the blue.
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