Yesterday’s Trading:

After Friday’s NFP, a pinbar which indicates a weakening of the euro has formed on the euro/dollar graph. I’ve gone into detail about it in today’s idea.

The US unemployment level in April remained at 5%. Job creation in the non-agricultural sector rose by 160k against a forecasted 195k. February’s figures were revised down from 245k to 233k, whilst March’s NFP was reassessed downwards to 208k from 215k. The economically active part of the population fell 0.2% to 62.8%.

A figure of 160k and labor force of 62.8% means the euro/dollar should fly up to 1.1550. The euro/dollar rose to 1.1479 on the news and by trading close it returned to 1.1400. I don’t really get the reaction of traders to the report. However, I can say that they didn’t want to sell the dollar just yet.

Market Expectations:

Today is Monday and so I’m not paying attention to the news. I expect to see a correction to 1.1430. At this level is 45 degrees. Don’t be surprised if the euro/dollar rises to 1.1450/60.

Day’s News (EET):

11:30, Eurozone business confidence index from Sentix;

12:10, FOMC member Charles Evans to speak.

Technical Analysis:

Traders who opened long positions on the back of the weak NFP figures had to close them before the weekend. By analyzing the market reaction to the report and the open positions in the COT report I’ve come to the conclusion that the euro/dollar is firstly heading down to 1.1320/30. As soon as the pinbar comes off, the pair will shift to 1.1730, forming an upward channel on the weekly. On Monday I expect to see a rebound to the 45th degree at 1.1430.