The EUR/USD pair initially fell during the session on Friday as the nonfarm payroll numbers came out much stronger than anticipated in America. However, the market looked upon the numbers with suspicion as they rightfully should. It turns out that there was quite a bit of John gains given via workers leaving the workforce. Because of this, the Euro got back all of its losses during the session, forming a massive hammer. This hammer is predicated on the 1.38 handle, and as a result I feel that the market should continue to go a bit higher. After all, we really try to break it down but couldn’t.
However, I see a lot of resistance above. The 1.39 level is the first problem, and then you have the 1.40 level which of course is being monitored by the ECB. The European Central Bank has made it well known that the 1.40 level is essentially a “line in the sand.” Because of this I feel that the central bank may get involved sooner or later.
European interest rates announcement
Keep in mind that there is an ECB interest rate announcement this week, and they could very well surprise the market if they feel threatened. Regardless, you can almost bank on insane something about the Euro being artificially high, and as a result I suspect that this market is going to really struggle to pick up any real steam to the upside. However, the fact that we could not sell off tells me that perhaps the market is willing to fight the ECB on this one.
As far selling is concerned, I need to see a resistive candle or a move below the 1.38 handle with some type of vigor and significance. Right now, I don’t think that is going to happen so I believe that this market will continue to consolidate in the general vicinity that we have seen for some time now. In other words, it’s going to continue giving most of us out here in the Forex trading world headaches.