The EUR/USD pair went back and forth during the session as you would expect on a nonfarm payroll Friday, it ended the day slightly positive. The market did close above the 1.31 handle, and in and of itself that is somewhat of a victory for the Euro. Nonetheless, we see this market is grinding away between the 1.30 and the 1.32 levels, and as a result of that we think that this market will be very choppy to say the least.
Remember, there is no permanent solution to the Italian political problems quite yet, although there have been significant advances in that realm. On the other hand, we still have problems with unemployment in Spain reaching over 50% for the youth, while the banking situation around the European Union continues to be very weak indeed. Quite frankly, if it weren’t for the Federal Reserve and its incessant quantitative easing, one has to wonder whether or not the Euro would be valued at parity instead of where we see it now.
Looking at this chart, it appears that we will continue to go sideways, and this could be the way that this pair trades for the rest of the spring. Once the summer months come, a lot of the liquidity constrained out of the marketplace as traders head towards places like the Hamptons, and as a result we could see a difficult trading in environment I had as it simply ends up being a choppy and sideways market.
We feel that a break below the 1.29 level would of course be very similar that point time we think momentum would have shifted to the downside again. On the other hand, we also feel that a break above the 1.3250 level would be significant enough in order to see this market go higher, perhaps as high as the 1.35 level. The market will certainly be headline driven, and there will be plenty of events in Europe that could push his pair around as there is still plenty of concern about the economic conditions in that region. With that being said, we are too keen of the Euro right now but do recognize the fact that for the short-term trader, we could have a nice range set up between 1.30 and 1.32 for the foreseeable future.
Written by FX Empire