The EUR/USD pair fell rather dramatically during the session on Thursday, which was foreshadowed by the wicked looking shooting star on Wednesday. The 1.32 level had been resistive previously, so technically speaking this pair look like it was ready to start pulling back again.
Obviously, what had more of an effect on this pair would have been the rate cut coming out of Brussels during the session, and as a result we saw the market really crumble. The 1.30 level below should be supportive, and I think that support runs all the way down to roughly 1.2950 or so. That being said, this pair will more than likely find a lot of buyers down in the general vicinity, and obviously with today being nonfarm payroll Friday we will more than likely have a significant amount of volatility.
I have to admit that I'm somewhat surprised by the reaction in the Euro Thursday, as a lot of the market participants would have known that the ECB was going to cut rates. That being said, we may have had a little bit of an overreaction. Regardless, we are still well within the consolidation zone, and I believe that sometime during the session on Friday we will see a lot of buyers come into the marketplace around the 1.30 handle. If we don't get that low, then we will simply continue to slam around between the 1.30 and the 1.32 handles.
The market looks like it wants to go sideways for a while, although I am the first to admit that this looks somewhat like a double top. I would not be interested in shorting this pair for any length of time until we get down below the 1.2950 level on at least a four hour candle close. Going forward, I fully expect the Euro bulls to return as they tend to do. Nonetheless, trading this market before that announcement comes out will definitely be more or less gambling, which is something I will not do. Quite frankly, a lot of prudent traders will simply wait until they get that daily close in order to see what the market really thought about the number. Remember, the volatility will be extraordinarily high.