The EUR/USD pair fell slightly during the day on Wednesday, testing the 1.05 level. That’s an area that has been supportive in the past, so it makes sense that we might bounce from here. However, I see a lot of negativity in the moving averages, and I believe that there is a lot of fear when it comes to the potential results of the French election. After all, one of the strongest candidates once the leave the European Union. Bond traders are starting to bet against the European Union, signaling that they doubt it will even exist in a few years. Rallies that show signs of exhaustion near the red 50-day exponential moving average would be and I selling opportunity, but I must admit that if we break down below the bottom of a hammer, the market should then reach to the 1.0350 level underneath.
The Federal Reserve looks likely to hike interest rate a couple of times between now and the end of the year, and that of course will continue to favor the US dollar. I think that the market will eventually try to reach towards parity, but we obviously will have a lot of volatility between now and then. The 1.0750 level above should now act as an absolute ceiling in the market, and it’s not into we break above there that I have to start thinking about the trend again. Currently, it appears to me that the sellers are completely in control, and this bounce is probably going to be more of a technical bounce than anything else, because quite frankly I don’t think anything has changed fundamentally to push this market around. Because of this, I’m simply looking for selling opportunities but I recognize a lot of high-frequency traders haunt the EUR/USD pair now, so it’s hard to get a longer-term move to follow. It does tend to be a bit of a short-term trader’s type of environment, so simply selling the rallies multiple times will probably be the best way to go about dealing with this market.
Written by FX Empire