Corrects higher after US employment plunge. Seeing some selling as US traders enter.

The EURUSD fell sharply after the US jobs report on Friday showed nearly a 300K gain and a decline in the unemployment rate to 5.5%. Today it has a bit of a Monday hangover, as we have seen a corrective move higher and are now seeing a move back toward the closing levels from Friday. The pair is moving gingerly around - with little accomplished so far (you know that hangover feeling ; ) ).

Looking at the 5 minute chart, the downside momentum continued in the 1st hours of trading today with the price moving to new 11+ year lows at 108.223. The next target. I had came in at the 108.04/09 area (see post outlining that level HERE), but that level was not seriously tested.

The subsequent rally today took the price back about 38.2% of the move from the Friday high to the low reached today (see chart above at 1.09023). That has stalled the corrective move, and we are now seeing a rotation back down toward the closing level from Friday (at 1.0843). The 200 bar MA on the 5 minute chart at the 1.0852 level (that is the low) is being tests. That seems to be stalling the decline for the time being.

The sellers are still in control. It is hard to pick a bottom in the pair just yet. The ECB started the QE process today and that should keep the EURUSD under wraps. The US employment continues to be the envy of the world as well. However, there will come a time when the EURUSD move runs out of steam as a result of:

  • 60B of QE
  • Stimulus from a lower EUR
  • Stimulus from lower rates
  • Building off a LOW base

The targets on the downside include 1.0804-09. This was a collection of lows from 2003 (see chart below. Below that will be the 1.0759 level which is the low from that period as well (see the chart below from that time period).

Below that level, the next target comes in at the 1.0585 area. This is the lower trend line on the monthly chart below. The 1.0500 level is behind that.

On the topside now, the buyers really have the burden to take back control. The holding of the 38.2% and the high correction price of the Friday action will be a hurdle to get above today/this week. If that area can be breached, the 1.0927 becomes the next target (50% of the move down from Friday) as it tries to regain control. The 1.1000 level seems like it might be a hard level to crack now and the 1.1097 low from January 2015 seems a distance away as well. Both will be other targets that will need to be breached if the bottom is indeed in place. It is hard to see it though....