We’ve had our eye on this level for some time now. We also discussed the you see below on Thursday of last week. At the time, it seemed that the most likely scenario would be another pullback into the 1.1670 area. Apparently, the bulls had other plans.
With Friday’s close above 1.1875, there isn’t much to prevent a retest of the 2012 low at 1.2040. Just above that level we have resistance which could become a factor again as it did in early August.
A rotation lower into the 1.1875 area would likely encounter an increase in buying pressure. Only a daily close (5 pm EST) below 1.1875 would negate the outlook toward 1.2040 and re-expose the 1.1670 .
Keep in mind that Wednesday features the ADP employment change and prelim GDP figures for the U.S. As usual, the main event is Friday’s non-farm payroll at 8:30 am EST.