The EUR/USD pair had an extraordinarily bullish day on Monday, breaking above the 1.12 level handily, and reaching towards the 1.13 handle. The market should continue to go higher, and a break above the 1.1315 level is reason enough to think that the market is going to reach towards the 1.14 handle, and then eventually the 1.15 handle longer term. I believe that the market breaking out above this level is a significant sign of bullish pressure, and I think that the market will open the floodgates if we can get that break out. Alternately, if we turn around I think that there is plenty of support underneath to send this market higher. The 1.1250 level underneath should continue to be an area that attract a lot of attention as well.
ECB President Mario Draghi surprise the markets with hawkish rhetoric during the day, and that of course at the EUR much higher. I believe that the markets were vulnerable as so many people will sure of this currency pair, but even if we break above the 1.13 level census market no higher than the 1.15 level anytime soon, as it is the top of the three-year consolidation area that we have been in for some time. The 1.05 level underneath could be considered the bottom of this range, so as we approach the 1.15 level, I would be much more bearish. But in the meantime, it looks like we are trying to break out to the upside and touch that top of the consolidation area yet again. Ultimately, this move was so sudden that I would be a bit suspicious about continuation without at least a pullback or some type of consolidation in the meantime. Regardless, the volatility looks very likely to pick up.
Written by FX Empire