The EURUSD pair initially fell during the day on Wednesday, but found enough support near the 1.12 level to turn things back around and form a nice-looking hammer.

The hammer of course suggests that the buyers are in control, and quite frankly with today being the FOMC Statement, we believe that the market is essentially “leaning” towards the Federal Reserve not being able to raise rates, or simply being in the camp of “one and done” when it comes to hikes. With this, it is likely that the market will go higher, especially if we get what it is the buyers of the Euro expect.

Pullbacks will be supported as far as we can tell, but you have to keep in mind that there is an outlier. There is the possibility that the Federal Reserve suggests that there are multiple interest-rate hikes coming, and that should drive down the value of this currency pair. Quite frankly though, the economic announcements recently have not led us to believe that the Federal Reserve will do that, and it’s more than likely going to show that the interest-rate hike that is probably coming might be one of trepidation, meaning that they do not want to push the economy too quickly.

If that’s the case, then the Euro is sold off far too drastically. The European Union is starting to recover a bit, and it looks like we would head towards the 1.15 level given enough time. Above there, we have been saying for a while that could be a sign that a trend change is just around the corner. Any pullback from here again should be a buying opportunity if we get enough support. The 1.10 level below is essentially the “floor” in this market.

If we do break above the 1.15 level, then the market will more than likely pullback from time to time in order to offer value in the Euro. Above the 1.15 level it’s very likely that we then reach towards the 1.25 level given enough time. Selling isn’t really a thought again until we get below the 1.10 handle.

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.

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