The EUR/USD pair had a slightly positive session on Friday after the US Non-Farm Payroll numbers came out roughly in line with overall consensus. Looking forward, this normally represents a "risk on" rally waiting to happen, and this of course normally pushes his pair higher. So the reaction wasn't overly surprising except for the fact that we didn't gain any more than we managed to.
I still believe that the breaking down of the 1.3150 support level is much more important than an in-line jobs report out of United States. There are a lot of different reasons that this pair could have started to slump, but the final nail in the coffin was the suggestion that the Federal Reserve could possibly exit the bond buying program sooner than expected. If this is the case, this will drive money back into US bonds as they will pay higher yields.
1.29 and 1.3150
I think we are now in a consolidation area between 1.3150 and the 1.29 level. I think we are ultimately heading to the 1.29 level, but we may get a little bit of a pop first. After all, the 1.3150 area was significant support, and most of the time when you get significant support like that you will get a retest of support for resistance. With this in mind, I actually hope that this pair gets a little bit bullish over the next session or two so I can start shorting again.
The 1.3150 level is only the beginning of serious resistance. There is obviously quite a bit of resistance all the way to the 1.33 level, and it will take a break of that level on a daily close for me to start buying the Euro again. Not only did the euro look horrible on Thursday against the US dollar, but it did so against many other currencies. With this in mind, the action on Friday can be put into a little bit of perspective. Obviously, if we managed to break the bottom of the Friday lows first, then at that point time I think a shorter-term trader could start selling and aiming for 1.29.