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The EUR/USD pair fell during most of the session on Thursday, but managed to bounce in order to form a bit of a hammer. We are currently sitting just below the 50% Fibonacci retracement from the fall in the Euro, and as such we think that the potential for serious resistance all the way up to 1.27 exists.
Obviously, the nonfarm payroll number later today is the most important driver of the markets. Because of this, we need to see how this market ends up, but if we cannot break above the 1.27 level after the ECB promising to buy "unlimited" bonds out of the European Union, and a strong jobs number - this would be horribly bearish. Of course, if we manage to break above 1.27 and stick it for the daily close, we think that this pair goes up to the 1.30 handle.