EUR/USD had a slightly positive day on Monday, but let's keep in mind that the North Americans had very little volume to work with. This was because of the Labor Day holiday in the United States, and the relatively low volume that the Canadian strength of the markets. However, we can get some type of analysis based upon the last several days, and it does look relatively bullish for this pair.
I have been talking for some time about a massive resistance area all the way up to the 1.27 level. It appears that we will challenge that again, and if we do we could get a lot of answers to the questions that we currently have about this pair. The pair has been in an up trending channel for a couple of months now, and it looks like that is set to continue. However, it should also be noted that the 1.27 level is roughly at the 50% Fibonacci retracement level from the fall back in late spring. It's because of this, that I am still a little bit tepid about going long, although I certainly see that the buyers are deathly in control at this moment in time.
This month matters
The month of September will see many of the traders that have been gone on holiday over the summer break come back to the markets. The liquidity will rise, and of course we have several different headline events over the next couple of weeks that will push this pair around.
Because of this, the Euro may be a bit difficult to trade over the next couple of weeks. We have the German High Courts deciding on whether or not some of the European Union moves have been constitutional. Simply put, if the Germans don't come along for the ride - the union is done. Also, we have Dutch elections coming up over the next couple of days that will determine whether or not they put in Euro friendly politicians.
There is also and European Central Bank meeting, but it is more than likely that the ECB will hold off on doing anything as they have to wait until the 12th to see what the Dutch and Germans do. Because of this, there are lot of innuendo and rumors that will creep into the market and push prices around. With that in mind, I can only trade the technicals when it comes to this pair, and at this point in time I see that we are still pressing into a massive resistance area. I am however, willing to admit that we can run to the 1.3 level in short order if 1.27 gives way.