Eurozone October unemployment was higher than expected, combined with a lower November CPI estimate, has put the euro under considerable pressure on this low volume, post-holiday Friday. But the established trends of related markets all point towards a higher EUR/USD. The extremely strong bond market with corresponding low interest rates should decrease any demand for dollars on a yield basis. The short-term trend of the equity market remains higher and crude oil is still considerably above 50, so for now our bias will remain to upside in the EUR/USD pair.

EUR/USD has pulled back into Fib zone support consisting of the .618 retracement and measured move of wave a = c. While EUR/USD remains above 1.2650, I think the likely path is higher towards 1.2850. I am unable to trade until the new month begins, but I would be a buyer of EUR/USD between 1.2700-1.2720 with stops below 1.2660 targeting 1.2780 initially, and then ultimately 1.2850.



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

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