The EUR/USD pair did very little initially during the day on Wednesday as we awaited the FOMC statement. Ultimately, the market looks as if it is stock in some type of consolidation between the 1.1625 level on the bottom, and the 1.17 level above. If we can break higher, and I think that is the longer-term move, we should then go to the 1.1850 level. This is a market that should show significant amount of volatility after this announcement, but I believe currently has a “floor” at the 1.15 handle. Because of this, if we pull back from here I would expect to see the market find buyers near that area. Alternately, if we were to break down below the 1.15 handle, the market should then break down rather significantly. That significant breakdown could have the market looking to fill the gap that formed several weeks ago, and could send this market much lower.
I believe that we are trending higher, and that buying dips will be the way to go. Let the market cool off after the announcement, and wait for stability to return. Once that happens, buying the Euro should be the way to go. I don’t have any interest in shorting until we get below the 1.15 handle, but if we do then I would become massively and aggressively short of this market as it would show a complete turn around in the attitude of the market and of course the US dollar overall. I believe that given enough time, we will test the 1.1850 level above, and probably sooner than most people realize. This has been an explosive moved, followed by a couple of days of consolidation. That is typical, and quite healthy in an uptrend.
Written by FX Empire