The EUR/USD pair fell slightly during the day on Thursday, but found enough support near the 1.1785 level to turn around and form a bounce. Ultimately, today could be a very important session for this pair, because Mario Draghi and Janet Yellen both are speaking today at the Jackson Hole Symposium, and that of course will throw a lot of noise into the marketplace in general. Expect an extreme amount of volatility, as there is the possibility of headlines crossing the wire to cause quite a bit of issues. Ultimately, the longer-term charts look to be forming a bit of a bullish flag, and that of course is a very strong sign. I believe that the market prefers to go to the upside, but we need to clear the hurdle of potential headlines to feel comfortable going long.
In general, I’m buying pullbacks as I believe this pair will probably go looking towards the 1.20 level next. We haven’t had the break out yet, so patience will be needed, but I do think that there are not be what they’re looking to buy this market given a chance. The 1.20 level being broken probably clears the way to the 1.22 level next. Breaking above the recent 3-year consolidation signal that we could go as high as 1.25, but that is obviously a long-term call. I expect a lot of noise between now and then, but one can certainly make an argument for the European Union being much stronger than anticipated, and that of course will reflect itself in the currency. The ECB looks likely to start tapering off of quantitative easing, and that of course should be reflected in this chart as well, as traders are starting to price out the ability for the Federal Reserve to raise hikes with any intensity.
Written by FX Empire