The EUR/USD pair fell for the balance of the session on Friday as the nonfarm payroll numbers came out of the United States much stronger than anticipated. The US added hundred and 46,000 jobs during the month of November, and this of course skewed the bullishness of traders to the US over Europe. However, when you look a little bit deeper and those jobs numbers, you see one glaring red flag: 350,000 people have been counted as "leaving the labor force" in the month of November. In other words, they simply aren't accounted anymore. Because of this, the numbers look much stronger than they truly are.
Nonetheless, by the end of the session we did get a bit of a bounce as we approach the 1.29 handle. This area has acted as support previously, and the Friday candle is now a hammer, and it does look somewhat supportive. Because of this, I feel that we will more than likely see a bounce higher from present levels.
1.29 is the floor for the time being.
For myself, I think that this is a "buying only" pair as long as we stay above the 1.29 handle on the daily close. I fully suspect that if we break above the highs from the Friday session, we could see another run towards the 1.31 handle. Whether or not we can break above the 1.3150 level is an entirely different question altogether and quite frankly at this point time I would be a little bit suspect of anyone who suggests that we will.
Remember, we are heading towards the most illiquid part of the year, and although this week should be fairly decent, after Friday we should start to see the volumes really drop off as traders head home for the holidays. Because of this, I think that we may have a bit of back and forth and volatile market moves over the next five trading days, and this will only increase as we get into the second half of December. With that being said, I believe that this market will remain somewhat range bound between the 1.29 and 1.3150 handles.
If we managed to break down below the bottom of the Friday session, at that point time I am more than willing to start selling as I think the market would head towards the 1.27 level. As for buying, breaking that top from the Friday session would be a good enough signal to do so, but I would only look at it as a short-term trading opportunity.