The EUR/USD pair fell hard during the session on Thursday, surprising most traders out there in the marketplace. Even though this market has stalled recently, I have to admit that I was caught off guard as well as the market also hard. We did in fact close below the 1.36 handle, which of course is a very negative sign. However, having said that there is plenty of support below and I think that the 1.35 level will continue offer support, and because of that I'm actually looking for some type of supportive candle in order to go long of this market. I don't want to short it, simply because the Euro has been so strong since early July.
Quantitative easing
Quantitative easing continues to hamper the value of the US dollar overall, and as long as the employment situation is so poor in the United States, it's almost impossible to imagine that the Americans will be able to taper off of quantitative easing. Going forward, that will be what eventually drives his pair down, but that is quite a ways away from now.
Until that happens, we have to focus more on the fact that the European Union is exiting recession, which of course should drive up the value of the Euro. Investment is starting to pick up in various countries, including Italy and Spain, stalwarts of the idea of "hot money" coming into the area. If that's the case, we should see continued bullishness and not only the European stock exchanges, but the Euro itself as money flows into the Union in order to take advantage of these markets.
Because of this, I'm actually looking for that supportive candle that I've mentioned previously, although it's possible that today might be a little bit rocky as well. At the end of the day though, I do believe that this market bounces higher, and should go as high as 1.40 before it's all said and done. The US dollar will continue to be hampered as long as unemployment continues to be far too high. We need a nonfarm payroll number of at least 250,000 consistently to even begin to think about the Federal Reserve tapering off of quantitative easing in my opinion.
