The EUR/USD pair fell again during the session on Friday, but this time managed to break down below the 1.35 handle. This of course is the beginning of a very significant support area, and of course it’s also a large round, psychologically significant number that traders tend to pay attention to the most. Because of this, the day certainly suggests more weakness ahead, but we are not completely clear on the support in my opinion and as a result I would like to see a break below the lows from the session on Friday in order to start shorting. If that happens, it’s very possible that the market heads down to the 1.33 handle, as it is the next major support zone.
Alternately, we could find some type of support in this general vicinity, and that’s why I need to see a daily close before I make any trading decisions. Quite frankly, even though the session on Friday was very bearish, it wasn’t enough to make me feel that the buyers will try to step in and at least pick this up a little bit.
Jobs numbers on Friday.
I believe that the nonfarm payroll numbers coming out on Friday will be a massive influence on where this market goes next, and as a result we could get a couple of days that are relatively flat. This is mainly because it will determine what the likelihood of the Federal Reserve tapering off of quantitative easing is. Having said that though, there is an ECB rate decision in the middle of the week as well, so my suspicion is that the Monday session might be relatively quiet, barring some type of shock in the news.
With all that being said, I probably will wait until the close on Monday to make any decision, and could even use this market as a proxy to determine the strength of the Euro overall, and perhaps trying to play against a currency that is going in one direction or the other. In other words, it may be simply better to avoid the US dollar for the next couple of sessions.
