The EUR/USD pair broke down significantly during the trading session on Tuesday, reaching down towards the 1.2270 level, an area that has offered support recently. I think that if we bounce from here, the market will probably go looking towards the 1.2350 level, as we await the Federal Reserve interest rate statement. There is a lot of noise in this market, and a lot of concern currently as we do not know which direction things are going to go. I think that the announcement coming out of the Federal Reserve is likely to be a major catalyst as to where the greenback goes next, which of course is a major catalyst as to where this pair goes.
There is a major uptrend line underneath, and of course the 1.21 level as well, as it is massively supportive. I believe that buyers will be very aggressive in that area, and if we were to break down below it, that could send this market spiraling downward. Between now and the announcement though, I would not expect major moves, and quite frankly it’s a bit surprising that we have fallen as hard as we did, mainly I believe in reaction to softer than anticipated German economic figures.
I believe that the market is going to be very noisy, and this will course may trading this pair difficult. Ultimately, I think that value hunters will return, but they may have to wait until we get some clarity of the Federal Reserve. 3 interest rate hikes this year, this pair continues to go higher. If we get four, that is likely to send the pair lower.
Written by FX Empire