The EUR/USD pair initially was very quiet during the day on Wednesday, but then shot much higher as the overall attitude of the market remains bullish. The US dollar continues to be sold in general, so that’s not a huge surprise. We also got good manufacturing numbers out of the European Union, so that of course doesn’t hurt either. When we look at the longer-term charts, it’s easy to see that there is a bullish flag being formed, and the ECB President Mario Draghi didn’t say much about the value of the currency, so therefore it looks likely that the ECB isn’t monitoring the value of the currency significantly. If that’s the case, I think that the market should continue to be bullish of the pair, and that will be especially true if Janet Yellen sounds even the slightest bit dovish on Friday.
I continue to buy dips in a market that I think shows plenty of support. I believe that the 1.17 level is acting as a floor in the market, and I believe that if we can stay above there, the market is very likely to continue to go higher. The 1.20 level above will more than likely be significant resistance, so it would not surprise me at all that it might take a bit of momentum building to get above there. In the meantime, it’s likely to be a market that you can buy short-term dips for building a larger position, because the longer-term charts breaking above the recent consolidation over the last several years could send this market looking as high as the 1.25 level above. Longer-term traders will continue to hold the Euro, and sell the US dollar from what I can see. If we break down below the 1.17 level underneath, then I may have to step back and reevaluate the situation.
Written by FX Empire