The EUR/USD pair fell initially during the Thursday trading hours, but as you can see by the daily chart we had experienced a bit of a rally later in the day. The resulting hammer suggests exactly what I've been thinking for some time now: that the 1.35 level will in the being massive support going forward.
The 1.35 level of course is the neckline from the massive inverted head and shoulders that has been formed over the last several months. Because of this formation, I believe that we are going to go much higher in this pair. Obviously, the Federal Reserve continues to keep its monetary policy very easy, and as a result the US dollar will continue to depreciate. This is simply because the Federal Reserve can depreciate its currency like no other central bank around the world, and as a result any time the Fed is easy, they always "when" the race to the bottom.
Adding to that is the fact that the European Central Bank has already stated that it has no immediate need to adjust monetary policy, and you have the perfect recipe for this pair to continue higher. The fact that the Europeans don't see the need for a weaker currency suggests that this could be a one-way trade for a while.
Nonfarm payroll
Today's of course nonfarm payroll Friday, and as a result this pair could be quite volatile. However, the fact that buyers were willing to step in before we even got down to the 1.35 line tells me that any pullback should be more or less met with buyers. Because of this, I think that a knee-jerk reaction to the downside during the session would actually present a buying opportunity. I also see support down to the 1.34 level, so there is the possibility that we have a bit of a "squishy" type of support. Regardless, I have no interest in selling this pair at the moment, as the sentiment is so bullish for the Euro against currencies in general, let alone against the US dollar.
