Expect choppy behavior, but now I believe we are more likely than not to see a bit of a bounce.
The euro initially fell on Friday but recovered after the jobs figure. It looks as if we are trying to form some type of bottom, but the pair does tend to be choppier than anything else. When I look at this chart, quite often I think of it as a significant indicator as to what is going on with the US dollar, so even if I do not have any interest in trying to trade this market, it is very likely that we will see the US dollar drift lower in value. Looking at this chart, it does suggest that perhaps you could short the US dollar against other currencies that are doing a bit better.
If this pair can break above the 1.1620 level, that would take out a little bit of a short-term “brick wall” and open up the possibility of a move towards the 1.17 handle. The 1.17 level is an area that I think would attract a certain amount of attention, but I think of this more or less as an indicator, and I very rarely trade this market. A short-term bullish trade could be had, but unless you are willing to babysit the charts on the short-term chart, it is likely that this pair probably will not do much in the way of a bigger move. If we were to break above the 1.17 level, this is a market that could go to the 1.18 handle, but I think at that point other currencies such as the New Zealand dollar would take off to the upside and give you much larger gains.
That being said, if we break down below the 1.15 handle, then I believe that the euro is in serious trouble, and we will probably have the opportunity to buy the US dollar against most currencies. Again, I think if we break down, we will have an opportunity to get to the 1.1250 level, but that is as negative as this pair gets. Ultimately, we could be in the very early stages of trying to form a bit of a “double bottom” over the last month or so. Expect choppy behavior, but now I believe we are more likely than not to see a bit of a bounce.