EUR/USD rose during the session on Tuesday as the bullish momentum for the Euro continues. However, by the end of the session we gave back much of the gains and formed a shooting star. This shooting star is just below the 1.30 level, and it does appear that we are going to face a significant amount resistance in that general vicinity yet again.
With the nonfarm payroll numbers coming out on Friday, it's very unlikely that significant moves will be realized between now and then unless some type of headline shock comes out. This of course is very possible, as there are many problems in the European Union right now.
Essentially, this pair comes down to which side of the Atlantic traders are focusing on at any given moment. Right now, there seems to be more weight given to the idea of the Federal Reserve expanding its quantitative easing policy than the various issues in the European Union. However, there will eventually come a time where Europe takes over the headlines again, and then of course this pair will fall. That has been the overall attitude of this market for quite some time now, and there is nothing in the charts or the fundamental analysis that makes me think that we will stop this schizophrenic and hectic dance.
Nonfarm payroll number will determine next leg
Right now, the nonfarm payroll number will more than likely dominate traders concerns. However, we won't get this information until 8:30 AM Eastern Standard Time on Friday, and as such the next couple of sessions will be kind of difficult to trade. There are a couple of areas in the general vicinity that can give us trading signals, but more than likely we won't see them triggered.
If we managed to break down below the 1.2750 level, this would not only be a break of reasonably strong support, but it also shows that the recent trend line as broken down as well. This would have me selling this pair again. However, there is also the possibility that we go higher. On a daily close above the 1.30 handle I believe that we will eventually test the 1.33 handle and possibly even as high as the 1.35 handle.