The EUR/USD pair tried to rally during the day on Thursday, but then pulled back to reach the 1.12 level for support. That’s an area that has a certain amount of psychological importance, and it looks as if the moving averages are starting to offer support as well. If we can break to the upside, I believe that the 1.1250 level will offer a little bit of resistance but ultimately it appears that the Euro continues the strength against the US dollar in general. The longer-term consensus should be a move towards the top of the longer-term consolidation area, reaching towards the 1.15 level above. That means that we do have some way to go, and therefore buying on the dips could be done. If we break down below the 1.1170 level, then I think we may drop a little bit more significantly, perhaps reaching towards the 1.11 level at that move.
Strengthening European Union?
It appears that the European Union is starting to strengthen a bit, so that of course has helped the currency. Ultimately, the market has been reflecting that, but we are currently in a state of consolidation around a large, round, psychologically significant number. A break above the 1.1250 level should send even more buyers jumping into the market, thereby making the move towards the 1.15 level a bit of a self-fulfilling prophecy if you will. Pullbacks continue to be buying opportunities for longer-term traders, only the short-term traders will be interested in selling, and I believe that following the longer-term money is probably the best way to get involved. If we do break above the 1.15 level, that will course signify a longer-term uptrend waiting to happen, and a significant shift in the flow of currency around the world.
Written by FX Empire