The EUR/USD pair fell initially during the day on Thursday but turned right back around to form a bit of a hammer. This of course is a very bullish sign, and there is a lot of noise below that signifies we should continue to go higher eventually. On a break of the top the hammer we believe that this market will then try to reach the 1.13 level, and possibly even try to break above there. The Euro will continue to strengthen due to the fact that the Federal Reserve has step away from quite a bit of the potential rate hikes for the rest of the year. In fact, a lot of people that we know are starting to suggest that perhaps the Federal Reserve will raise interest rates at all during the year 2016.
Looking at the shape of the hammer, it is basically perfect, and as a result we believe that a break of the top the hammer will send a lot of technical traders into the market. The hammer of course suggests that even if we break down there is going to be increased pressure to the upside. In other words, we have no interest in selling this market and believe that the 1.1050 level should be massively supportive as it was previously so resistive.
More than likely, we will see quite a bit of bullish pressure going forward and could even break above the 1.13 level above and reach towards the 1.15 level. Because of this, we could attempt several times to try to break out to that level and perhaps even higher than that. The 1.15 level has been massively important in the past, and should be in the future. Keep in mind that both central banks are working against the value of their own currency right now, so it’s not likely to be an easy move. However, the Federal Reserve typically Wednesday’s “currency wars”, and with that it’s probably only a matter of time before this pair breaks out so pullbacks should be thought of as potential value.