By: Christopher Lewis

The EUR/USD continues to thrash back and forth as traders try to get a handle on the direction. The pair was once the favorite of most of my trading friends, but many of them absolutely hate the pair now. While it was once the “easiest” pair to trade, it has simply become one big mess of choppiness over the last several months.

The European debt issues are of course the problem and it is just now that perhaps the markets are finding that the problems in Europe are of a structural nature. (How they didn’t see this before is truly amazing.) In layman’s terms, the Euro is wrong simply because it benefits the strong, in other words Germany and the Netherlands, but puts a burden on the poor such as Greece and Portugal. Think of it like this: If you had a similar currency in the Western hemisphere, it would be a great boost to the United States and Canada as people in El Salvador suddenly find themselves able to afford the goods that those two countries export, but the flip side of that trade is EL Salvador would have to keep up economically – good luck with that. Granted, there is more to it than that, but that is the simplest way I know of putting how I feel about it.

Non-Farm Payroll

With the Non-Farm Payroll number coming out today, there will more than likely be a knee-jerk reaction, but the pair is stuck in a very tight range at the moment. The 1.32 level seems to be holding it back as resistance as the level was once support, and it is also the 382% Fibonacci level from the larger move down as well. Under that is the support area “around” the 1.30 level, which actually starts at 1.31 and goes all the way down to the 1.29 level.

Until we get out of this consolidation, this pair is going to be difficult to trade. More than likely, the quick move after the announcement is one that can be faded in either direction – no matter what happens. Truthfully, I think this pair goes nowhere in the end. However, if it breaks one of those levels, I am willing to put the trade in at the end of the day.

EUR/USD Feb. 3, 2012