The Euro had a positive session on Friday against the Dollar, but as you can see gave back about half of the gains. As we break above the 1.35 handle, we are starting to see some significant resistance. However, I don't see anything on this chart that tells me the market isn't going to eventually break out to the upside, so quite frankly the shooting star shaped candle on Friday does little to concern me.
The shooting star suggests that perhaps there will be a pullback at this point in time, but I see the 1.34 level as being supportive enough to keep the market from falling for any significant amount of time. Because of this, we feel that this market will more than likely attract buyers every time it falls, and that's especially true as the US dollar seems to be a bit of trouble anyway.
The Federal Reserve and European Central Bank
The Federal Reserve and the European Central Bank continue to push this market around. The ECB is anywhere near tightening, but we have seen the European Union escape a recession recently, while the Federal Reserve continues to run its quantitative easing program at full steam. Because of that, there is a natural bid for the Euro as it is considered to be the "anti-dollar", and as a result I don't really see any longer-term shorting opportunities in this market.
The Federal Reserve already stated that the jobs market is what is going to essentially push their decision, and right now the labor market in the United States isn't looking all that well. If that's the case, then this could be a long-term trade waiting to happen. With that in mind, I think that a break of the top of the range for the Friday session is a nice buying opportunity, which a pullback to the 1.34 level would be.
I do not see a shorting opportunity at all, and quite frankly I see a ton of support all the way down to the 1.31 handle, which of course is much lower than we currently stand. With that in mind, it's almost impossible to see selling this pair anytime soon.
