The euro currency got slammed in the first trading day of the year, whats next?
As we witnessed a broad sell-off in risky assets across the board during yesterday's first full trading day for 2014, we believe that the risks to the EUR/USD next move are broadly balanced for now. Let's see if ranges from Asian trading can be broken to take a position in this pair.
As we look at the chart there are two options to play this binary options forex pair in the coming hours. It can really go both ways as of right now, but as we keep looking at the chart the upside seems more plausible for now.
Don't get us wrong - we are not buying calls at current levels, however if we see an hourly close above 1.3680 we will try trading the pair by purchasing daily call options for today and Monday. The risks to the outlook from the US dollar stem from a slew of FED speakers later tonight.
The risks to the downside are stemming form the same source - we have Philadelphia FED's Plosser at 17:45 GMT and Mr Ben Bernanke himself at 19:30 GMT with his most likely last speech as Federal Reserve chairman.
We will keep a close eye on what do they have to say and keep track of minor data releases from the US this afternoon. Whatever happens we don't think they will have a big impact.
The pair consolidated yesterday's losses and as we were writing this report the EUR/USD tested support around 1.3630 which was yesterday's low. The failure is reinforcing our view of a gradual tick higher, however we still need a break above Thursday's rebound highs just below 1.3680.
Price is currently hovering around 1.3650 and we still see very thin liquidity in the market, which could mean two things - we either stay dormant until Monday or illiquid markets can spark volatility if we get some decent order flows form the US.