The EUR/USD pair went back and forth during the course of the Thursday session, but most significantly tested the 1.35 handle for support. I believe that the area is going to continue to be massively supportive, and as a result I think that buying opportunities will present themselves in this specific region. In fact, I am willing to look to shorter-term charts, and possibly start buying with the idea of a range being formed.
I believe that the range will be between the 1.35 level on the bottom, and the 1.37 level on the top. This in fact could be the summer range as far as I can see, as we have 2 central banks that are essentially trying to outdo each other when it comes to loose monetary policy. Ultimately, I believe that another problem that will come into play is the lack of liquidity, as most large firms and major players in the currency markets will be heading to holiday relatively soon.
Ultimately, we will breakout in one direction or the other, and I will follow.
I think sooner or later we will break out of this range, but right now I don’t really see anything out there that’s going to push the market hard enough to do so. I think a lot of traders will be content to do nothing at the moment, as there is simply far too much in the way of confusion and stagnation to be bothered trading this particular market. After all, there is a significant amount of action to be had trading the Euro against other currencies such as the Canadian dollar and New Zealand dollar. With that, I think that this pair remains one that you can only trade for the short term, aiming for something along the lines of 50 to 100 pips at a time.
I would expect a lot of resistance to come into play at the 1.3650 level, extending all the way to the 1.37 handle. We do bounce, I would be willing to sell that resistive candle that forms in the general vicinity. However, I think that if we break down below the 1.35 level, things get very interesting and we probably fall to the 1.33 level without too many issues.