The euro initially tried to push a little higher on Tuesday, but as you can see, has struggled to stay above the 1.16 level. Nonetheless, this is a market that has been slicing through this region often enough to perhaps kill off any type of psychological importance. Regardless, this is a market that I think more than anything else is trying to find its footing. The European economic numbers have been rising in its favor for a while now, but not quite enough to leave the United States behind.
Keep in mind that the interest rate differential between German and US bonds will also have its part of play in this market, so that could continue to be a major issue. With this being the case, it certainly looks as if we are going to continue to struggle for direction, but I think if we were to turn around and take out the highs of last week, that might have the buyers come in much more aggressive and could send this market looking towards the 1.18 level.
On the other side of that trade, if we were to turn around and break down below the 1.15 handle, it would be bearish enough to get this market looking towards much lower levels, perhaps as low as 1.1250. The 1.15 level obviously has a lot of psychology attached to it, but it also is an area that has been structurally important more than once in the past. With all of that being said, it is very likely that this is a market that will have to make a bigger decision sooner rather than later, but right now it is simply not able to be traded, because there is no real direction. The only way you can trade the EUR/USD pair right now is if you are a short-term scalper.
If you are looking for a bigger move, this is not the market to see it coming anytime soon. However, I do use this as an indicator on US dollar strength or weakness, and although the US dollar strengthened a bit during the day on Tuesday, you can still make a significant argument that we are trying to form some type of bottoming pattern. Because of this, I remain cautious, but obviously will take a look at this chart from time to time.
