The EURUSD pair initially fell during the course of the session on Monday, but found support near the 1.35 level yet again. This area continues to bring in buyers, and as a result we feel that the market is probably going to continue to consolidate overall. If we can get above the 1.36 level, we feel that the market will then continue to grind higher, aiming for the 1.37 level eventually. That would also suggest that perhaps the market isn’t ready to go anywhere anytime soon, and with that we think that the market would essentially hanging about in a 200 PIP range.

We believe that the central bank interference that we’ve seen in these markets will continue, as people simply trying to guess what the Federal Reserve and the European Central Bank will do next. It isn’t necessarily clear, even though the Federal Reserve has been tapering off of quantitative easing, while the European Central Bank is suggesting that it will do more, but is not expected to do so right away.

In other words, most traders have no idea which direction the banks are going to go given enough time.

The 1.35 level is significant support, and if we break below there we go to the 1.33 handle in our opinion. On the other hand, if we can break above the 1.3750 level, we more than likely will go towards the 1.40 handle given enough time. All things being equal though, we believe that this market will simply trying to bounce around in this general vicinity, and more than likely provide short-term trading opportunities at best.

One of the best things to use this chart for us to figure out where the Euro is going to go against the market in general, and then begin to look for other currencies that are weaker than the US dollar, assuming that we show Euro strength. On the other hand, if the Euros shirts to show weakness in this market, we would look for other currencies to buy against it as it will more than likely be a market wide phenomenon.

Editor’s Note: Equity investors/traders can use the Currency Shares Euro Trust (FXE, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro (EURUSD), minus ETF fee. The fund seeks to reflect the price of the euro with the shares representing a cost-effective investment relative to investing in the FOREX market.

Content curiosity of FOREXCycle