A big miss in payrolls indicates the economic slowdown has made its way into the employment sector. Employment figures are generally considering to be lagging, so the increased evidence of a US recession already underway suggests the rest of the global economy will have to follow the US path of easing monetary policy. Specifically, this means the EU might have to be cut rates, despite their steadfast approach to inflation-fighting, which is what precipitated this morning's selling. Technically speaking, this morning's new 1.4956 high throws a wrench into the works, but it's okay, because I am working a new wave count.

I have been following a 4th wave triangle that was almost completed, provided price remained below the January 15 high of 1.4922, but no dice. So now, the 3-wave move up from 1.4311 on December 20 introduces 2 scenarios. The first scenario has wave A down in 3 waves, wave B up to this morning's high in 3 waves, which means we could expect 5 waves down in C of 4 for a flat completing somewhere above 1.41311. Or, this morning's high is labeled as an extended B-wave, but with an A-B-C-D-E triangle. This means C, D, and E are yet to come, and consolidation is the name of the game in EUR/USD going forward. Either scenario calls for a weaker EUR, stronger USD in the next couple of weeks

Now, if EUR/USD can just relax a while and deal 1.4300-1.4900, this gives the dollar time to get pummeled against the Yen on the way below 105.00 and eventually 100.00, which means EUR/YEN will have to follow suit. EUR/USD at 1.4500 multiplied by USD/JPY at 103.00 equals EUR/JPY below 150.00 at 149.35 as we trade . Now, we have been tracking the EUR/JPY and Dow correlation for almost 6 months now, and today's rejection of the 12,700 for the 3rd time indicates we might see equity selling next week, which strengthens up my outlook for a lower EUR/JPY.

EUR/USD broke trendline support on the 2 hour chart at 1.4865. I was just offered at 55, but missed as we trade 1.4810. Going forward, we should remain below 1.4865 as we work lower towards 1.4400. Right now I am working nothing, waiting to get involved Sunday night after the Giants knock off the Pat.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.