In yesterday’s pre-ECB post, the steps higher were outlined for the upside and the downside (see https://www.forexlive.com/blog/2012/10/04/eurusd-prepares-for-draghi-and-the-us-employment-report/ ) The trend move higher was true to form, pausing at resistance levels, and resuming the trend. The price peaked at the 61.8% of the move down from the September high at the 1.30305 level (high reached exactly at that level) and since then, the market has stalled. We await the US Employment Report.

Expectations are for a 8.2% rate, NFP is expected to rise by 115K (vs 96K last), Private Payroll is expected to rise by 130K (vs 103k last), Manufacturing jobs 0K (vs -15 K last) and earnings up 0.2% for the month (vs 0.0% last).

From the important technical perspective, the levels passed on the way up become technical levels to watch if the price should move lower.

  • Currently the market is stalled between the 1.2994 and 1.3010 area. These levels respresent the April 2012 and March 2012 lows (see daily chart below) . A move to the downside off the release, should find resistance against these levels on corrections
  • 1.2987 = the midpoint since September high
  • 1.2971 = the highs from Sept 24 and 25. This is also the 38.2% of the move up from this weeks low. So this should be a key level with the multiple reasons. A move below and look for sellers on retracements.
  • 1.2957 = the high from September 28th
  • 1.2937 = double highs from October 1st and 3rd and is also close enough to the 100 hour MA (blue line in the hourly chart). Another key target below because of the multiple reasons for support
  • 1.2912 = the 200 hour MA (green line in the hourly chart).

With the price at around 1.3010, all these targets are reachable on a bearish move.

On the topside, the next targets above include:

  • 1.3047 = high from September 21
  • 1.3074 = Spike high from September 19
  • 1.3084/88 = Highs and lows from Sept 18/21
  • A move above this level, will take the price in the consolidation high region from the Sept 14/18 period. The key level to remember in this area is the 1.3148 level. This is the 38.2% of the move down from the 2011 high (see daily chart). This level was breached on September 14 and 17, but could not close above this level.
  • The highs at 1.31675 and 1.3171 will be the final barrier before the upside if opened for further exploration. It would be a stretch to get up so high today (but next week is certainly a possiblility). Last month the range low to high range extend 182 pips (higher). A equal 182 pip range today would extend right to that level. So it is a possibility.

Needless to say, risk is increased going into the number with Liquidity, Event and Market Risk all at peak levels. Anything can happen as a result of the number. The ADP, Challenger Job Cuts and most recent Initial Claims were better than expectations and the EURUSD rallied (risk on?) . Does a stronger or weaker number have the same reaction with action favoring the EURUSD on a better number and not favoring the EURUSD on a worse than expected number? I don’t know. So I will watch the target levels the market has set out for us and use them to define and limit risk, after the event and liquidity risk is over. Good fortune with your trading.