The EURUSD pair initially dropped a bit on Thursday, but then shot towards the 1.14 level above.

The area above there should be massively resistive, extending all the way to the 1.1450 level. Beyond that, the 1.15 level above is the top of a longer-term consolidation area that has lasted for almost 3 years, so break above there will be massively important. Today should be vital, as the Nonfarm Payroll numbers come out of the United States, and of course will have a massive influence on what happens next.

This market breaking out to the upside should send this market to at least the 1.18 level over the longer term. Alternately, if we get a dollar positive result, this should send the market back down towards the 1.13 handle. I think today is going to be very choppy as it typically is on Nonfarm Payroll Fridays, but I’m more interested in the close of the day, as it will show us exactly what the market is going to do.

Caution will be needed

I believe that there will be caution needed during the day, as you typically see on employment announcements. However, today is going to be especially important as we are starting to find what the Federal Reserve will do later this year. It appears that if the breakout comes, that should signal that the market believes that the Federal Reserve will not be able to raise interest rates as quickly as once thought.

With this in mind, I will probably be on the sideline most of the day, but eventually I will find a reason to place a trade, and the weekly close will show exactly what is going to happen over the next several weeks, if not months going forward

Editor’s Note: Equity investors/traders can use the Currency Shares Euro Trust (FXE, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro (EURUSD), minus ETF fee. The fund seeks to reflect the price of the euro with the shares representing a cost-effective investment relative to investing in the FOREX market.

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