The EUR/USD pair broke higher during the course of the session on Wednesday, using the 1.10 level as a bit of a springboard. Because of this, the market looks as if it is ready to continue going higher, and we believe that it is only a matter of time before this market continues to go higher. The gap from the beginning of the week has been filled a couple of times now, and as after a result we feel that the resistance will eventually get broken above.
Keep in mind, this is the epicenter of market volatility at the moment, as the Greek debt crisis continues to play out. Ultimately though, if the Greeks come to the bargaining table and fully accept the terms of the banks, the Euro should go higher. If the Greeks to leave the European Union, we will eventually see the Euro strengthen based upon that anchor round its neck being gone. Quite frankly, it’s only a matter of time before the Euro rises, but in the meantime there are a couple of levels that we are paying attention to.
We believe that the 1.10 level is the epicenter of support, but that the support extends down to the 1.09 handle. Because of this, as long as we are above the 1.09 handle, we are buyers of the EUR/USD pair on pullbacks that show signs of support, and of course breakouts to the upside. So having said that, we are buying pullbacks and we are also buying a break above the top of the range for the session on Wednesday. Either should send this market looking for the 1.13 level over the course of the next several sessions, but we also recognize that there will be a lot of volatility no matter what happens and as a result you will have to be able to handle a lot of back and forth and motion sickness as far as that trade is concerned. Ultimately though, we are bullish and think that the Euro will continue to attract longer-term “smart money.”