By FX Empire.com
The EUR/USD pair had an explosive week over the last 5 sessions as the Federal Reserve announced it was going to continue the ultra low interest rate policy until the end of 2014. This in turn saw a massive selloff of the Dollar against most currencies, Euro included. As a side note, there is also talk about a possible workout for the Greek debt issue as well, and as usual the rumors float the market higher. However, this is a movie we have seen before.
The 1.32 level is roughly where the week is finishing, and this is another resistance point that the pair will have to deal with. The pair has had a nice bounce, now it needs to show whether or not it can continue it. It is also possible that the market could fall from here, and it is possible that we simply have reached the top of the overall consolidation area. (This is possible judging by the levels on the chart.)
The pair has been very susceptible to rumor and headline news lately, and one has to think that the trend will continue. The pair has in the past been very reliable in its fluid motions, but it seems those days are long gone at this point. As a result, the markets have been a short-term affair most of the time.
Longer-term traders will more than likely continue to struggle to get decent risk to reward signals in this pair as the movements have been so erratic over the last couple of years, and especially so over the last several months.
Going forward, most longer-term traders are going to be forced to take their cues off of the daily charts. The 1.32 level is a big one, and any signs of weakness on it could possibly lead the markets down to the 1.25 level again. However, the struggle for fluidity will more than likely continue, much to the frustration of many traders. This pair has a downward bias, but now we need to see resistive candles from which to sell.
EUR/USD Forecast for the Week of January 30, 2012, Technical Analysis
Originally posted here
