The EUR/USD pair broke much higher during the course of the session on Friday, as the nonfarm payroll numbers out of the United States were much lower than anticipated. Because of this, it looks as if the market will punish the US dollar for the time being. However, we see a significant amount of resistance just above, so it’s very likely that this market will fall back down. We are looking for some type of resistant candle in order to start selling but we see that the market closed towards the highs. However, one cannot overlook the fact that the 1.10 level offered enough resistance to keep the market underneath it.
Keep in mind that the US dollar has been the favored currency for some time, so having said that we believe that the markets are quite ready to give up on it. Yes, the jobs numbers were very disappointing, but at the end of the day there are a lot of different moving pieces when it comes to the EUR/USD pair. The European Central Bank continues to keep very loose monetary policies in a fact, while the Federal Reserve has step away from the quantitative easing game. Undoubtedly the jobs numbers will set back expectations for the first rate hike out of the United States, but at the end of the day the US is much more likely to raise rates than the European Central Bank.
We do not have the opportunity yet, but we believe it’s only a matter of time before we can start selling again. On that resistive candle we will not hesitate, and we believe that the market will head down to the 1.0750 level, and then perhaps the 1.05 level. Once we get below the 1.05 level, this market is free to break down to the parity level which is our longer-term target to begin with. At this point time we don’t really have a scenario in which were wanting to buy this market, but of course we will have to keep an eye on all of the moving pieces to see if anything changes.