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The EURUSD pair continues to consolidate around the 1.1000 level against the US dollar as the euro attempts to gain strength, following a worrying test towards the 1.0900 level.
Also, we have now entered into the blackout period for the Fed, this is the point where Fed speakers are all done until the upcoming Fed meeting at the start of May.
Personally, I think that the EURUSD pair is about to move higher and the upcoming rate hike from the Fed, which seems on the cards is already priced in.
MUFG bank have also noted they are looking for the euro to move into a much higher trading range. The bank note that “We expect EUR/USD to move up into a higher trading range after breaking above the 1.1000-level on a more sustained basis.”
They also add that “Fears over a sharper growth slowdown have also been eased by the quick action taken by the Swiss authorities to deal with concerns over the health of Credit Suisse that have helped reduce financial stability risks in Europe.”
The ActivTrader Sentiment tool suggests that 31% of traders are bullish on the EURUSD. This is a very good sign for bulls if we consider that retail traders are still selling despite the solid reversal to 1.1000 this week.
As traders, we typically look to fade retail sentiment when it is overly skewed in one direction. This style of trading, fading sentiment, has been one of the most effective and used tactics of hedge funds.
The EURUSD is currently showing a large, inverted head and shoulders pattern could be forming. The size of the pattern would indicate that a short-term bottom could be nearing around the 1.0600 area.
However, the chart is still bullish for the EURUSD over the short-term and as long as we see the euro holding above the 1.0950 level we could see a test towards the 1.1100 zone.
According to the daily time frame, the pair is close to activating a large, inverted head and shoulders pattern, with the target of the pattern located close to 1.1500.
As long as the EURUSD pair stays above the 1.0800 price level then medium-term analysis shows that further strength towards 1.1500 is possible.
