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

The EUR/USD pair rose during the session on Monday, but as you can see gave back about half of the gains by the time the market closed. The 1.37 level has offered a bit of resistance, but quite frankly I think it has more to do with the fact that we are getting to close the Christmas than any type of significant resistance that’s going to keep the market from doing what it wants to. Ultimately, I think it’s just the beginning of resistance at the 1.37 level that we are seeing, and it extends all the way to the 1.38 handle. It is at the 1.38 handle that we will see a much more significant battle unfold.

I believe that between now and the end of the year, this market probably won’t do much, and will more than likely focus on the 1.37 level overall. Because of this, it’s going to be a short-term traders market, and therefore I find it difficult to trade this market for anything more than a short-term scalp.

It’s still about jobs...

For my money, the market is still focusing on jobs in the United States. After all, if the Federal Reserve gets a decent employment report again, that could have the market thinking that the Federal Reserve is getting closer to tapering off of quantitative easing. On the other side of the Atlantic, we have the ECB, and the fact that they are facing potential deflation. That will be very negative for the Euro, and should extend at loosening the monetary policy. If that’s the case, the Euro should get beat up over time, and that of course should favor the US dollar.

Below current areas, I see the 1.35 level as being supportive, and then ultimately the 1.33 level. Even if we start to fall from here, I would be stunned to see this market get below the 1.33 handle anytime soon, and therefore I am more of a fan of the theory that we will simply grind sideways in a relatively tight market. Because of this, I’m focusing more on the hourly chart, with a little bit of an upward bias.

EURUSD Daily 122413

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