The EUR/USD pair rose during the session on Friday, as the nonfarm payroll numbers came out rather disappointing. Because of this, the Euro got a bit of a gain against the US dollar which of course was pummeled against most currencies. Adding to that is the fact that this currency pair had pulled back to the 50% Fibonacci retrace, as well as the 200 day exponential moving average.
As the numbers came out, the market seems to believe that it's less likely to see the Federal Reserve taper off of quantitative easing. That of course is very dollar negative, and as a result the Euro gained as it is considered to be the "anti-dollar" currency. Because of this, most traders would have sold off the Dollar first and asked questions later. The Euro of course is getting a little bit of a boost just simply because of the fact that the European Union is coming out of a recession.
Expect a lot of volatility
Over the course of the next couple weeks we will more than likely see quite a bit of volatility, simply because traders are coming back from the summer break, and they are trying to ascertain as to what the Federal Reserve will do. Unfortunately, there is no clarity at the moment, and the numbers that came out during Friday's session certainly did nothing to clean things up. Because of that, a lot of different traders will be think a lot of different things simultaneously.
I believe that until the Federal Reserve comes out and tells the public what they are going to do as far as tapering off of quantitative easing, this market will be a short-term traders market only. However, I do have to admit that it is interesting that we not only bounce from the 50% Fibonacci retrace, but the weekly candle is a hammer. So will have to see what the Fed does, but I think the market is starting to lean in the direction of tapering out of the Fed. However, keep your stop losses tight as we can expect a lot of noise.
