Euro could go lower still, provided that...
The EUR/USD pair has been on a rollercoaster since yesterday when the Federal Reserve has finally dropped its "patience" language from the statement made by the monetary policy authority of the U.S. central bank. This has proven to be already priced in into the market as we expected.
But nobody expected the extent of the move that will happen yesterday. Traders in the EUR/USD who have been shorting the pair for months have headed for the exits, making prices go up dramatically by over 3.5% to mark a high above 1.10.
This was not the end however, as in subsequent trading the EUR/USD has given back all of its gains and is currently trading at levels seen before yesterday's announcement by the Fed, and before the press conference of Janet Yellen, who signaled that the U.S. central bank is not worried by the strength of the U.S. dollar.
Binary options traders have been hectically trying to figure out where are the prices going next, while we have taken a patient approach and are assessing our trading options. The first and most likely one that we see is for prices to go lower in the immediate future, however some conditions are necessary.
We would be buying daily calls for tonight's expiry at 21:00 GMT only if the EUR/USD price which is currently trading around 1.0663 drops below 1.0640 and closes below that level on an hourly basis. This will confirm additional weakness in the euro, which remains driven by the prospects of Greece exiting from the Euro Zone.
On the other hand on the upside we are seeing 1.0740 as the high point which could trigger a move on the upside if the level is broken. We would be carefully looking at this point and if we see an hourly close above that level, we would move forward with a call trade. That said, for now we see the first scenario as more likely.