The EUR/USD pair sold bit of a bounce from the lows of last week on Monday. The candle isn't necessarily impressive, but it does suggest that the market is trying to find a little bit of a floor at this point. After all, the Euro seems like it can do the long term wrong, and the move that we saw last week was based almost entirely on a few offhand comments by ECB head Mario Draghi. The mere suggestion that he thought the Euro was a bit too lofty had the "weak hands" bailing immediately.
Looking at this chart, I can envision a consolidation area between 1.3350 and 1.37 or so. This would be a bit of a crossroads in this pair for the longer-term, and as a result it makes sense that the market would be very cautious about going too far in one direction or the other.
I still think the 1.35 level has some significance, but now that we have broken above and below it, that significance does wear down a bit. I think the move over the last couple of days has been far too strong, and anybody who thinks that the European Central Bank can out print the Federal Reserve has got to be out of their mind. We all know that the Fed is still going to be extremely easy and the monetary department, and even if the ECB joins the game, they are the amateurs in the Fed is by far the more professional of the two outfits when it comes to devaluing their own currency.
Sideways
I still think this market more than likely go sideways over the short term, and since we are near the bottom of the potential consolidation area I believe that buying is the only thing you can do. With this being the case, I am more than willing to buy on a break of the highest from the Monday session as it would show a significant first higher in momentum. As for selling, I don't think it's possible until we get down below the 1.33 handle as it would show the next noisy area giving way to the sellers.
