Euro rallies during the week but gives up much of the gains

The EUR/USD pair initially started to rally during the week but rolled over a bit as we continue to see a lot of volatility. Quite frankly, that’s not a huge surprise considering how hard we had sold off. If we do rally in take out those losses, it could take months. If we can break above the top of the candle for the week, then I think we can continue to go towards the 1.20 level. Over the next couple of weeks though, I suspect that we are going to go back and forth around the 1.1750 level. Short-term trading is probably going to be easier to deal with, and I believe that the 1.15 level has shown itself to be massive support.

If we did break down below the 1.15 level, not only would it be the market smashing through the 50% Fibonacci retracement level, but would also be a large come around, psychologically significant number giving way, and of course the bottom of a hammer. That would be a “triple play” of negativity and could send this market much lower. It is because of this that I think there should be plenty of buyers underneath and eventually value hunters will come back in. One potential driver of this market to the upside could be the ECB stepping away from quantitative easing, something that supposed to be discussed on 14 June.