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Forex pairs in this Article » EUR/USD
By: DailyForex.com

The EUR/USD pair fell during most of the session on Thursday, but as you can see got enough support to pop up to form a fairly decent looking hammer to show signs of support near the 1.33 handle. This doesn't surprise me, because the Europeans have just come out of a recession, so there is a little bit of a natural bit under the Euro. However, what is somewhat surprising is the fact that during the Wednesday session minutes released by the Federal Reserve suggested that plenty of the board members were on the side of Ben Bernanke, and his timeline for tapering off of quantitative easing which should be very dollar positive.

That being said, I think this hammer does suggest that the market has already decided that the Federal Reserve will not taper soon, and you have to keep in mind that we are in the dead of summer, so the liquidity just isn't there. That being the case, there is the possibility that this market will simply bounce a bit from here and remain below the 1.35 handle. However, I think a short-term trader could find a little bit of a decent trade from this level.

EUR/USD Daily Chart Aug 23

Keep an eye on the Federal Reserve, as well as rumors.

I hate this type of market. It's based upon rumors, innuendo, and simple speculation. On top of that, we are in the dead of summer so the liquidity is in their which of course means that the amateurs have full reign at times. They will move this market around as the larger traders are simply away for the summer. However, you should start seeing the beginning of September some clarity in this pair, as well as all dollar related currency markets. Until then, expect a lot of volatility but as soon as the Federal Reserve makes its intentions known, we should see a nice significant move in one direction or the other. On the downside, if we move below the 1.32 handle, I think we’re going all the way down to the 1.28 handle and probably even lower

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