The EUR/USD pair rose again during the Friday session as the Non-Farm Payroll numbers in the United States came out much weaker than expected. This is mainly because of the expectations going forward that the Federal Reserve will have to engage in further quantitative easing. This obviously should bring down the value of the Dollar in general, and as such the Euro got a little bit more of a relief rally.
This does however overlooked the fact that the Europeans are easing in much larger volume than the Americans will. Nonetheless, the breakout continues and we certainly cannot fight the markets at this point in time. Although I am very bearish of the Euro in general, I certainly couldn't short it at this point in time.
Another thing that is telling you about the intentions of the Euro is the fact that Friday finished at the very top of the range. This normally means that continuation is about to occur, and as such I think that if you are a short-term trader you can actually start buying this on the dips all the way up to the next massive resistance area which I see as the 1.30 level.
Short-term bullish, long-term bearish
For me, the 1.30 level looks very resistive. I would be more than willing to sell this currency pair at that level if we get any signs of resistance or bearish activity. However, one cannot argue with the fact that the 1.27 level has been smashed through and was the last vestiges of resistance that the pair will see in the near term.
It is because of this that pullbacks will be bought by me as long as we are above the 1.27 level in this pair. I consider this a short-term trade though, as I believe long-term there are still plenty of bearish turns out there to force the Euro lower. Also, the Europeans need a lower value Euro and will eventually do things to make it come true.
As the ECB looks set to engage in bond buying, this will flood the market with Euros and should continue to push prices lower. Of course, on the other side of the Atlantic we have the Federal Reserve that looks set to engage in quantitative easing again, and it really will come down to how much they do. If they aren't as aggressive as people may think, there's a good chance that this pair will fall at the above mentioned 1.30 level.
