The EUR/USD pair fell during the session on Thursday, but as you can see we remain pretty close to the 1.35 handle. Because of this I feel that this market is essentially taking a rest after a nice move higher, and of course it makes sense that the market would simply sit still because of the parabolic nature of the move. Going forward, I fully expect this market continue going higher, as the US dollar will continue to be punished by the fact that the Federal Reserve did not taper off of quantitative easing this month.
There is a shooting star from last week which is a nice marker for traders to look at as a signal to start buying again. I also believe that a pullback will more than likely attempt the buyers to step into the marketplace, especially around the 1.34 level as it is so supportive in my opinion. Going forward, I fully expect see the 1.40 handle over the next several months, especially as the Europeans have exited a recession.
The dollar is on its back foot
The US dollar is on its back foot in general, and of course the Euro is the "anti-dollar." That being the case, it makes sense that this pair continues higher as the interest rate differential should continue to favor the Euro, and more and more money flows into the European stock markets. All one has to do is look at the DAX, the CAC, or even the IBEX in order to understand that money is in fact flowing into the European Union at the moment.
Looking at this chart, I feel that it's dips will be bought time and time again, much like we saw a couple of years back. There was a point when all one has to do is by the Euro, and sell the Dollar. I don't know that is going to be as easy as it once was, but certainly at this point in time the Euro will be favored. I certainly wouldn't be selling this market, not with the recent move that we have seen.
