EUR/USD Price Forecast – range bound trading continues on TuesdayThe EUR/USD pair rallied a bit during the trading session on Tuesday, but it remains well within the consolidation area that we have been in. The market currently looks as if it is struggling a bit with the idea of the 1.18 handle but based upon longer-term charts I like the look of what we are seeing right now is it could simply be a sign of the market trying to build up more momentum to the upside.
The EUR/USD pair will have an interesting week, as we have the ECB meeting on Thursday that could determine what’s going on next with the quantitative easing coming out of the European Union. Right now, it appears that the market is starting to think that we could see the EU walk away from the quantitative easing relatively soon, and that should continue to support the Euro itself. Beyond that, we should keep in mind that the pair sold off rather drastically due to the situation in Italy, which seems to be calming down a bit.
The Italians have recently stated that the plan on staying in the Euro, something that wasn’t entirely clear recently. Because of this, the market is oversold in general, and a bounce from the 1.15 level makes a lot of sense through that prism. We have formed a massive hammer at the 1.15 level, and therefore it makes sense that we could see a continuation as we reached as high as the 1.25 level recently. The selloff with so fast and brutal that a bit of a bounce was almost a given once we reached down to the major support level a couple of weeks ago. In the short term, I think that the market will move mainly based upon the statement coming out of the ECB, but it appears that the buyers are starting to flex their muscles again.