The EUR/USD pair has gone sideways around the 1.20 level during the session on Wednesday as we continue to look bullish overall. There is a lot of noise in this area, and of course resistance due to the large, round, psychologically significant area. If we can break above the recent high, the market should continue to reach to much higher levels, which I believe signals that we are going to the 1.25 level over the longer term. I believe the pullbacks continue to offer value, and therefore I look at it as an opportunity to get involved “on the cheap.” Based upon the recent breakout, we should continue towards the 1.25 level after the 3-year consolidation area. Ultimately, the market should continue to be choppy, and given enough time I think the buyers will get their way. This will be especially true if the Federal Reserve should stay on the sidelines after the damage from the hurricanes that hit the United States. Simultaneously, we have the European Central Bank is looking to taper the quantitative easing, so at this point I think that the central banks will be hawkish of the longer term, but I think the ECB is currently in favor.
With the European Union doing better economically, that should continue to attract buyers of the currency. We continue to make higher highs, so that of course is a bullish sign as well. Beyond that, the stock markets in the United States should continue to go higher, and if they do, quite frankly that normally census market higher over the longer term. If we do pull back, I believe that there is a significant amount of support at the 1.19 level, and that could be an area to pick up a little bit of value.