The EUR/USD pair spent most of the day on Tuesday falling, but as you can see found enough support just below the 1.35 handle in order to bounce and form a fairly nice looking hammer. This hammer of course signifies that we could see buyers stepping into the market, and it would make sense as we are towards the bottom of the consolidation area that we had recently been trading in.
You have to remember that the Euro is the "anti-dollar", and as a result we can often understand was one of the US dollar simply by looking at this particular market. That being said, we are certainly seeing a diversion from what we had previously seen and the fact that US dollar had been gaining strength overall. That's not true now, as the European Union has exited a recession, and the Federal Reserve looks to be lost at best.
That being said, I fully expect see this market continue to grind sideways for a minute, but then take off to the upside after we get the rest that we need. The market had taken off quite a bit in the beginning of September, so it makes sense that it has to "catching its breath", as markets typically will do after a parabolic or strong move.
1.35 is a significant area
I still believe that the 1.35 area is significant, not only based upon the reaction over time, but the fact that it is a large round psychologically significant number. With that being the case, I feel that that should offer plenty of support in this general vicinity. However, if you look at the charts you can see that the support extends all the way down to the 1.3450 level, so it's more of a region than a support zone.
All that being said though, I think that the 1.36 level will continue to offer a little bit of resistance, but it will eventually be overtaken. This will be especially true if the nonfarm payroll numbers come out very weak when we eventually get that information.
