The second half of North American trade yesterday pretty much coasted on the coat-tails of the first half as established pre-conceptions regarding the EUR/USD continued to have their influence. The market started up on the day and stayed there without too much volatility even though US data points missed in the morning and Federal Reserve Vice Chairman Stanley Fischer echoed the sentiment of Chairwoman Janet Yellen by indicating that the Fed would probably raise rates by the end of the year. Of course, we were already given that line of reasoning last week when Yellen took to the podium after the Fed’s meeting, but there was a great sigh of relief among traders as Fischer essentially verified what the market had interpreted.
Another potential snag in yesterday's afternoon trade that didn’t create much fanfare was the conference between Germany’s Angela Merkel and Greece’s Alexis Tsipras. The leaders met to discuss the various issues between the two nations, and came away from the meeting on much more conciliatory ground than the Finance Ministers of each nation who have been trading jabs through the press over the last few weeks. Since no major hang-ups were detected, the EUR had a little relief rally which has advanced the EUR/USD to a very intriguing level, one which may help determine the future course of the pair.
Last week, I wrote about how the EUR/USD advanced right up to a declining trend line after the Fed made their intentions known and was soundly rejected at that point, as the USD regained some of its lost ground thereafter. Since then, the EUR/USD has gradually advanced higher and is approaching the same trend line that it was turned away from last week. In addition, the EUR/USD is completing a Fibonacci based Bearish Gartley pattern at the same level which, if it holds, would signify two levels of resistance at current levels. While that would follow a very well-worn narrative that this pair has experienced over the last several months (advancing only to fall soon thereafter), it appears trader sentiment is beginning to turn, and a break of this trend line may signal a changing of that stance moving forward.
In other words, it’s decision time for the EUR/USD as we discover whether previous tropes reign on or whether a new story will be written.
