The EUR/USD pair had a negative session on Friday after initially tried to rally. This is a market that will continue to be very volatile, as we have the Federal Reserve raising interest rates on one side of the equation, but at the other side we have questions about the European Union. The markets continue to focus on whether the European Central Bank can cut back on quantitative easing, while simultaneously waving goodbye to the United Kingdom. I think this continues to be very choppy trading conditions, but longer-term we have been consolidating between the 1.05 level on the bottom and the 1.15 level on the top. I think that the weekly shooting star that we are form suggests that we may continue to drop from here, but I would also anticipate that the 1.10 level should bring in plenty of support. I think that this is going to be the way going forward, simply chopping away back and forth with a very sloppy consolidation area for the longer term.
I believe the volatility continues to be the way going forward in this market, so therefore you have to be very careful about position size and of course where you place your stops. I think that the 1.1240 level offers natural resistance in a market that’s ready to continue dropping, at least for the short term. This pair tends to be attractive to high-frequency trading, so therefore I think this is going to be the norm going forward for now on. It used to be one of the easier pairs the trade, quite frankly it’s gone completely choppy over the last couple of years. Ultimately, I believe that range bound systems will probably be the best way to trade this pair.
Written by FX Empire