The EUR/USD pair went back and forth on Wednesday as the markets still continue to look relatively confused. This is mainly because we don’t know when the Federal Reserve is likely to taper off of quantitative easing, and because of this we think that markets will favor the Euro, but not so much that the markets can continue a parabolic move for long. After all, the market cannot continue going straight up without some kind of pull back in order to keep the pressure to the upside.
Remember, the Euro is considered to be the “anti-dollar”, and of course strengthens every time the US dollar finds itself in trouble. The fact that the Federal Reserve looks unlikely to be able to taper, at least in our opinion, should continue to put a bid in the market for the Euro, and the fact that the 1.37 level offered support doesn’t exactly put a hole in our confidence either.
The market should continue to find buyers every time it dips, and the recent pullback hasn’t been so sharp that we think anything has changed. Quite frankly, this looks very healthy, and this is exactly the type of pullback that we want to see in order to start buying again. That being said, there really isn’t necessarily a candlestick to start buying, but we feel that the market should continue higher regardless. If you are a short-term trader, you may find the opportunities on a short-term chart, but regardless we are in the “buy only mode” going forward.
We think the next week when the employment numbers come out, there will be enough interest in it that it should move this market. Quite frankly, we still believe that the market is going to the 1.40 level because the United States is not adding enough in the way of jobs. Because of this, we do favor the Euro over the longer term, and as a result every time this market pulls back we will be looking for supportive action in order to take advantage of value as the Euro will be bid up again and again.
Written by FX Empire