EUR/USD Forecast September 22, 2016, Technical Analysis

The Euro initially fell during the course of the day on Wednesday, testing the 1.11 handle. We ended up finding enough support below to turn things around and form a hammer, which of course is a very bullish sign. If we can break above the top of the hammer, we should continue to see buyers enter this market as I think we are simply trying to find a little bit of consolidation going forward. After all, the markets don’t really know what to do but I think if we can break down below the bottom of the hammer, that would open the floodgates down to the 1.10 level, which I think does happen given enough time. In the meantime, it’s going to be very choppy and as a result it’s going to be ultimately a short-term traders market.

The charts show that the market is awaiting the FOMC Statement, but at the end of the day the market has already pretty much priced in the idea that the FOMC may raise rates once towards the end of the year, probably in December. With this being the case I think that the markets will react much and we will simply continue to consolidate with a slightly negative bias. After all, the highs have been getting lower recently, and although we did break down and find support, we are testing the very lows of the support so it’s not going to take much to pressure this market and continue going much lower.

I think rallies at this point in time will eventually show signs of exhaustion that you can sell, so although it would not surprise me to see this market reach towards the 1.12 handle, I’m not necessarily willing to take that move and I still continue to favor the US dollar because even if there is a bit of hesitation by the Federal Reserve to raise interest rates, they are essentially the only central bank around the world even looking at the possibility. With this, I believe that this market continues to be tight.

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