The September Euro futures contract went on a wild ride on Thursday, first buoyed by speculation that the European Central Bank would begin some form of quantitative easing and then crushed when ECB President Mario Draghi failed to give speculators what they wanted.
Yesterday the Euro surged to the upside, taking out the previous top at 1.2389, but slamming into a 50% retracement level that stopped the rally cold. The subsequent turnaround in the market took out the previous bottom at 1.2336, turning the main trend to down. After taking out this bottom and another 50% price level at 1.2215, the market broke through a Fibonacci price level at 1.2175 and an uptrending Gann angle at 1.2182.
Daily September Euro Pattern, Price & Time Analysis
The Euro was able to mount a slight recovery late in the session to finish off its low, setting up this morning’s slight bias to the upside. This morning’s action is most likely position squaring ahead of today’s U.S. Non-Farm Payrolls report.
Technically, the new main range on the daily chart is 1.2051 to 1.2413 with a retracement zone at 1.2232 to 1.2189. Overnight the Euro straddled both sides of the retracement zone, indicating trader indecision. Additional support comes in at 1.2211 and 1.2131. If there is a buying surge then the market could stretch to 1.2405 to 1.2429.
A weaker than expected jobs number will likely mean the Fed is going to implement another round of quantitative easing in September. Speculators could weaken the U.S. Dollar on the move, driving up the September Euro. If 100,000 jobs are created as estimated then look for the Euro to weaken as this would likely trigger a move into the dollar.
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