EUR/USD Forecast October 29, 2014, Technical Analysis

The EUR/USD pair had a volatile session during the day on Tuesday, but truthfully I believe that this market is waiting to see went the Federal Reserve does as far as an interest rate decision today. I recognize that the Federal Reserve more than likely will keep rates exactly where they are, but will really get the market moving is the statement. If there is hints of the Federal Reserve tightening of monetary policies or at least some type of hawkish behavior, that will be very good for the US dollar, and send this pair much lower. On the other hand, if they make it abundantly clear that the market should and anticipate any type of hawkish stance from the Federal Reserve anytime soon, then this pair could go higher.

Looking at the chart though, I cannot help but notice that the 1.28 level is the beginning of significant bearish pressure, pain all the way to the 1.30 handle. I have been suggesting this for some time, and there is nothing on this chart that even remotely suggests that it’s about the change. I believe ultimately some type of resistant candle in this vicinity will be an excellent selling opportunity as we break the bottom of what looks like a bearish flag, and the perhaps head down to the 1.25 level during the next several days.

I recognize of the 1.25 level should be supportive, and it might be a bit difficult to get below there. However, I do think based upon longer-term charts that we will break through there and head closer to the 1.2050 level, which would be a “round-trip” of the uptrend now that we have broken below the 61.8% Fibonacci retracement level, which is normally very bearish sign. Ultimately, you have to keep in mind that the European Central Bank will more than likely have to loosen its monetary policies anyways, so really it’s difficult to imagine a scenario in which the Euro gain significant strength over the longer term anyway. I am bearish, and continue to look at rallies as potential selling opportunities, or “value” in the US dollar.