The EUR/USD pair went back and forth during the session on Tuesday, forming what is essentially a flat session. This doesn’t surprise as though, the Federal Reserve has a statement coming out later today, so to think that Tuesday was going to be a breakout day was probably asking a bit much out of the Euro, and more importantly the Dollar.
Because of this, we feel that the real move will happen until after 230 in the afternoon New York time, when the statement comes out. That being the case, we feel that if we can get above the red downtrend line just above current pricing that would be a very strong position for the Euro. That would be a breakout of a potential descending triangle, which of course is always a strong sign.
On the other hand though, we could see a breakdown of the bottom of the range for the session. If that happens, we believe that the US dollar will continue to work its way lower in this pair, grinding perhaps all the way down to the 1.28 level. After all, that is the bottom of the descending triangle, and has been massive support recently. It would simply be a continuation of what we’ve been seeing lately, with that being the case, it would simply state that the market was still trying to figure out what the Federal Reserve is going to do as far as tapering off of quantitative easing. After all, that is exactly with the markets going to be paying attention to during the session today, and any hint that they have made progress in a decision should move the markets.
The Federal Reserve decides to start tapering off of the next month or two that could be the catalyst to really push this market through the 1.28 handle eventually. If that happens, we fully expect to see the 1.22 handle and eventually, which of course would be a choppy move, and not a straight descent. On the other hand, if the Federal Reserve looks like it is not going to taper off anytime soon, that would be very Euro positive.
Written by FX Empire