EURUSD 12-10-06

12-10-06

EURUSD

The only currency pair that I gave a NFP trade recommendation for on Friday was the EURUSD. Watching more than one pair during the release of a report like the NFP is impossible. The NFP long trade at 1.3247 was triggered on Friday shortly after the release of the NFP report at 7:30 AM Central time. The exit was at 1.3360 when the EURUSD ran into the area of supply at the top of the range and retreated. If you followed the instructions to trail the stop tight after the entry, you were fine. CNBC is claiming that their interview with our Treasury Secretary Friday morning is what caused the sell off. You knew about the area of supply at 1.3360 for the EURO and the area of demand at 82.25 for the US Dollar Index days before their interview. That is the true reason for the reversal in the dollar on Friday. The US Dollar Index hit the 82.25 area for the second time and reversed. The low for the day on the $DXY was 82.24. The rest of it is meaningless. If there was no interview, the US Dollar Index would have reversed at 82.25, or it would have extended the bottom of the range a few ticks and then reversed.
The EURUSD is in a daily area of demand at 1.3200 and the US Dollar Index is in an area of supply at 83.33. I expect the EURUSD to trade in a big range between 1.3200 and 1.3280. It may only trade in a small range between 1.3200 and 1.3240 at first since the $DXY has an area of breakout support at 82.83. It could extend the range lower to about 1.3188. I will have to wait to see where the EURUSD opens on Sunday before I can say where to enter, but if it does trade below 1.3200, use a buy stop at 1.3202 to enter a long trade with a first target of 1.3340. If the $DXY reaches 82.83, sell the EURO position.