The EUR/USD pair had a strong session on Friday, but as you can see still remains below the 1.36 handle. This is an area that I think is the top of the most recent trading range, and I also think that we could very well find ourselves trading in consolidation over the next couple of weeks. While we will have to see what happens, I believe that the 1.36 level will be fairly resistive, and the 1.33 level will be fairly supportive. This makes sense of course, simply because the markets have a lot to think about at the moment, especially when it comes to the Federal Reserve into whether or not they can taper off of quantitative easing.
The unemployment claims have been a bit better recently, and as a result it has people thinking that the Federal Reserve could in fact taper off of the bond buyback purchase program, but we still need to see better employment numbers before the market will be truly convinced. After all, that is one of the biggest concerns that has been expressed by Federal Reserve board members, employment.
Nonfarm payroll, first-time unemployment numbers.
Both of these announcements will be heavily influential on this currency pair, as will European economic numbers. However, you have to keep in mind that the Federal Reserve is without a doubt the large central bank in the world, so therefore the move the markets much more than other central banks. Keep an eye out for headlines when it comes to Federal Reserve voting members, and with that in mind, all these conferences, meetings, and of course speeches. All of these scenarios can cause the markets to move, especially when there is some talk about the potential tapering situation.
Watching the nonfarm payroll number announcement is always important, but that has become even more important these days, as it is essentially the only question that the markets have at the moment. European economic numbers of course will affect the market, and the fact that Germany is starting to show signs of life certainly doesn't hurt the Euro, but at the end of the day. I believe that this market will favor the US dollar sooner or later, assuming that the employment situation picks up.
