Can the euro recover?
- The Euro is retesting the 1.03 level, as a support level that was important.
- It makes some sense that we are here as we head into the release of non-farm payrolls.
- That being said, Friday will be very noisy for the Euro as it is the most traded pair against the US Dollar.
The reaction to the jobs number is sure to be pretty wild, it usually is. Therefore, I think this could be an interesting pair to watch. Even if you won’t be trading the euro directly, you can use this as a gauge of how the US dollar will perform against several other currency pairs. So, with that being the case, if we bounce from here, I guess we probably have an area that we’re going to watch very closely somewhere around 1.044, and that area could be your first barrier.
What I’m looking for here is to see the Euro hopefully bounce back a bit so I can fade again. That’s been the game for a few weeks now, and I just don’t see that changing unless there’s something really unexpected in the jobs numbers as far as weakness in the US economy and it would take something pretty nasty to have people betting that the Federal Reserve will suddenly start with decreasing interest rates.
Bonds. That’s it
And that’s really where the rubber meets the road because of the bond market, interest rates continue to skyrocket in the United States. And in fact, I saw a little ad that they were starting to do the same thing in the UK. So, really at this point when the European Central Bank is ready to cut rates as much as necessary. I think you have a situation where it is very likely that the US Dollar will continue to beat the Euro. We hope to bounce back a bit so you can pick up cheap greens in the future. Given enough time, I fully expect EUR/USD to move back to parity.
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