Unsurprisingly, NFP surprised everyone! We were all waiting for bad news and for King Dollar to sink deeper into his marasma. Well, it didn’t happen. The headline number was bad and the market made the usual knee-jerk reaction. The dollar fell against the euro to 1.1247, then promptly reversed to 1.1110.
My upside target for EURUSD remains 1.44 in the longer term. However, my intermediate downside targets are 1.1100 and 1.1085. And those were my targets even without NFP. Now that the news is out, we are finding support just above these numbers. The drop from the price where the euro was trading prior to the news, to the lowest it has traded since, is about 100 pips. This is not earth-shattering for NFP. As I write the market had made a marginal lower intraday low and is back up to 1.1140.
You can sometimes tell more about a market from what it doesn’t do than you can tell from what it does. In this case there was no continuation in the drop. Or to be more precise, the initial drop stopped at 1.1140, then continued another 30 pips down only to rally back up to 1.1140.
My conclusion is the same as it always is when this happens. A solid trend is underway. Traders withhold orders in anticipation of NFP to avoid getting beaten up. The news is released, the market has an orgy, and when the dust settles, the backlog of orders comes back into the market and the trend continues.
I would not be surprised to see a one or two day retracement. But once the market takes out today’s high, keep your sights on 1.44.