The EUR/USD pair fell during the session on Monday as we continue to see quite a bit of volatility in this pair. This of course is due to the fact that the Federal Reserve has confused just about everyone, and initially the interest-rate announcement being a “hold” had people buying the Euro as the US dollar sold off rather drastically. After all, quite a few traders out there assumed that the Federal Reserve was going to have an interest-rate hike. Since they did not, that should be negative for the US dollar overall. However, the accompanying statement suggest that the Federal Reserve was very concerned about global economies and markets in general. The volatility is something that they are concerned about, and as a result it suggests that perhaps it is the US that still remains the one sole break spot in the global economy.
In other words, the Federal Reserve has decided that the rest the world was too shaky to feel comfortable normalizing interest rates. With that, it’s the same thing as saying that “it’s not us, it’s you.” That the Federal Reserve is too concerned about the rest of the world to raise interest rates that of course is going to be negative for commodity currencies, the Euro and of course the precious metals markets eventually.
Looking at this chart, you can see that there is a longer-term triangle that continues to contain price action as denoted buying the yellow area. With this, it’s only a matter of time before the buyers come back in our opinion, but that will be at much lower levels. At this point in time, we believe that this market is going down to the 1.11 handle eventually, and as a result we look at short-term rallies as selling opportunities will continue to present themselves on short-term charts. We have no real interest in buying this market now, at least not at the moment. We will see if there are supportive daily candles at reasonable places to consider buying, or of course a break out above the 1.15 handle. But in the meantime, that seems very unlikely.