The EUR/USD pair initially went sideways on Friday, but then spiked higher. The 1.1650 level offered enough resistance to turn the market around, but as I record this it looks as if we are continuing to go higher. I believe that the market will eventually go looking towards the 1.1850 level, and the pullbacks continue to offer nice buying opportunities. The bullish move on Thursday is certainly something that will continue to see momentum going towards the upside after that type of move, so I think that every time we pull back, there are going to be buyers waiting to pick up any type of value.
Buying dips will continue to be the way to handle this market, because quite frankly the break out was so stringent. I believe that the 1.15 level continues to be the “floor” in the market, but I would be surprised if we saw that level again. This is a market that I think will continue to be choppy, but nonetheless it will continue to find plenty of value on those pullbacks. I suspect that the 1.17 level above will be the next target, but I would be surprised if it offered any significant amount of resistance. I think that a pullback from there will only attract more attention, as the US dollar is certainly being sold off in expectation of a more dovish Federal Reserve than originally thought. I think that might be a bit of a mistake, but between now and October, when the ECB is expected to suggest its tapering program, I believe that the Euro continues to be favored over the US dollar at the very least. The one caveat of course will be the negotiations between the European Union and the United Kingdom.
Written by FX Empire