EUR/USD rallies a bit during slow trading on Wednesday

With the recent headlines coming out of both China and the US, risk appetite has come under fire. However, the EUR has done reasonably well in that same amount of time, bouncing from a major uptrend line on the daily chart, and breaking above the 1.2350 resistance barrier. I believe that short-term pullbacks will continue to be buying opportunities, and that we should then go to the 1.25 level above which is going to be major resistance. Once we break above there, the market would be free to go to my longer-term target of 1.32, but that is based upon weekly charts, and a breaking above the bullish flag that formed on the weekly chart. By doing so, it looks as if we are ready to go higher eventually, but those moose take a while to form.

Recently, there has been talk about the ECB tightening a bit, and that of course has put a bit of a fire underneath the pair as well. If the conversation between the Chinese and Americans can calm down a bit, that gives the global markets a bit more of a “risk on” feeling, and that should help this market. If we break down below the 1.2350 level, then I think we need to go down to the 1.23 level to find support. I also recognize that the major trend line underneath should continue to offer support, so I think that even if we do pullback, it will eventually be a buying opportunity.