The EUR/USD pair rose during the session on Monday, but as you can see failed to hang onto any gains. In fact, it formed what could be considered to be a perfect shooting star, in this signifies that we could perhaps pullback at this point. I think this makes sense, simply because the markets are still trying to digest whether or not the Federal Reserve can taper off of quantitative easing anytime soon. Without employment numbers coming out of the United States, we simply don't have the tools to quantify the possibilities.
All that being said, I firmly believe that the labor market in the United States isn't getting any stronger. I don't think it's getting any worse, but I just don't think it's getting any stronger. If that's the case, I don't believe that the Federal Reserve will be able to taper off anytime soon. I don't think monetary policies to get any loser, I do think we’re kind of stuck in this general malaise.
Pay attention to 1.36
Looking at this chart, I can recognize that the 1.36 level is going to be significant resistance. This was shown during the session on Monday, as we pullback and formed the aforementioned shooting star. At this point in time, I have to suspect that we will more than likely drift lower, but I do not see this market breaking down below the 1.35 handle for any real length of time. Because of that, I suspect that we are about to see a nice buying opportunity again, as the markets have been range bound, but before that were very bullish. Remember, quite often markets will take a breather after a significant move higher, which could be exactly what we are seeing.
As soon as the nonfarm payroll numbers are available, I believe that the Euro will continue to go higher just simply because the Federal Reserve will be painted into a corner so to speak. The Europeans have recently exited a recession, so it makes sense that there is a bit of demand for the Euro anyway.
