The EUR/USD pair rallied during the session on Friday, but as you can see gave back about half of the gains in order to form a shooting star. The shooting star is sitting just above a significant support zone in the form of the 1.35 handle, so I'm not particularly concerned about any weakness that the Euro could show at this point. Because of this, actually willing to buy this market even with this negative candle, especially if we show some type of positive energy. The candle from Thursday is in fact a hammer, and it is sitting on the 1.35 handle, so I figure that we will probably bounce around in about a 100 PIP range going forward.
With that being said, I don't see the supportive candle quite yet, but I would buy a break off the 1.36 handle, or any pullback that comes to the 1.35 area and find supportive action yet again. I fully expect to see that, and would even use a short-term charts to reenter this market as it more than likely will continue to be bullish over time.
Federal Reserve and tapering, or not?
With the jobs report not been released yet, it's not a big surprise that the markets having conclusively decided which direction to go. However, I see nothing that suggests that the jobs market has gotten much better in the United States, and as a result the Federal Reserve is probably still far away from tapering, which of course is a dollar negative event.
On the other hand, it could be that we are simply taking a breather after having a nice move higher during the month of September. After all, markets don't move in one direction forever, and as a result it's not a surprise to see a 100 PIP range over the last couple of weeks. I still believe that ultimately we go higher though, unless of course the nonfarm payroll numbers completely surprise. That however is more than likely going to be very remote in its possibility as the labor market continues to be soft in America.
