The US dollar initially fell on Tuesday, but found enough support to break out to the upside. On the daily chart, this broke the top of a hammer, and that of course is a very bullish sign. I believe that the market should continue to be choppy, and with the FOMC Statement coming out during the session today will drive this market in one direction or the other. The market should continue to be very volatile, but between now and then announcement it’s probably difficult to trade this market. I think a lot of the bullish pressure that we have seen during the session on Tuesday is probably a short covering rally as we are all waiting to see what happens with the FOMC.
I believe that this is essentially going to be a pair that you should stay away from today, because the reaction will be quite volatile regardless. However, if we broke above the 112.50 level, I would be convinced that we are going to go much higher, perhaps reaching towards the 114.50 level. Alternately, if we made a fresh, new low, then the market is all but a foregone conclusion to reach towards the 110 handle. Either way, by the end of the session, we should have a bit more clarity in this market, so it’s probably better to wait and see what the reaction is.
Written by FX Empire