The first thing you need to keep in mind when trading this pair is that the Euro is considered to be the "anti-dollar." In other words, if there is trouble in the United States, you can pretty much count on the Euro appreciating as a result. After all, this is the most heavily traded financial instrument on the planet, and as a result it does tend to react in somewhat of a binary nature. It is under this guise that I am making my prediction for the month of November.
I believe that the jobs picture in the United States will continue to be relatively weak. I'm not expect to see any negative numbers, just simply somewhere in the neighborhood of around 175,000 per report. Unfortunately, that is not enough to kick start an economy that needs to add roughly 200,000 jobs a month just to stay afloat. It doesn't mean that the US economy is going to fall apart, simply that it is somewhat stagnant, and doesn't look to be going anywhere anytime soon. Slight and weak growth patterns are to be expected.
It's all about the Federal Reserve, and whether or not they can taper off of quantitative easing.
The Federal Reserve is somewhat stuck at this point. They have already let it be known that they are paying attention to the employment numbers and whether or not they will be able to taper off of quantitative easing as a result. The fact that the employment situation United States really isn't getting much better suggests that the Federal Reserve will not be able to taper off of quantitative easing this year. Granted, there's only two months left, but it does clear up the situation a bit.
Because of this, I suspect that any pullback that we see in the Euro over the next several weeks will simply be a buying opportunity. I don't expect the Euro to explode to the upside, but I certainly can see that 1.40 will be targeted over the next several weeks. Because of this, I am buying this pair every time it drops shows any sign of support on the four-hour chart or above. As long as we stay above the 1.35 handle, I see absolutely no reason to think that this market is going to be anything but bullish for the month.
