EUR/USD Climbing Ahead of Friday’s US NFP

EUR/USD Climbing Ahead of Friday's US NFP

Last week, EUR/USD looked like it was ready to continue the bearish trend after breaking below a month-long rising trendline seen in the 4H chart.

EUR/USD 4H Chart 6/3
eurusd 4h chart 6/3
(click to enlarge)

In the 4H chart, we can also see EUR/USD finding support at 1.0818 last week. At first it looked like a corrective rally, but today, price anchored above 1.09 and made another sharp swing that looks more like a directional swing, or impulse wave at least in the short-term. The fact that price climbed back above the cluster of 200-, 100-, and 50-period simple moving averages (SMAs) reflects a loss of the prevailing bearish bias, and the fact that the 4H RSI climbed above 70 reflects initiation of bullish momentum.

Now, if price pulls back but holds above 1.10, it would be more evidence that EUR/USD is in an uptrend at least in the short-term.

Fundamental Factors:
Part of the 6/2 session rally can be attributed to better-than-expected eurozone CPI data which suggested that inflation has bottomed since  January and is on the rise. Another reason for the rally is that the USD fell across the board especially after US factory orders disappointed.

With the US NFP ahead on Friday, we should not expect too much of a rally. I would expect some resistance in the 1.12-1.13 area. Now, if price does not break above 1.12, the mode is still neutral-bearish, and a return below the 1.10 handle could very well reflect bearish continuation with pressure on 1.0818 and then the April low around 1.0520.

EUR/USD Daily Chart 6/3
eurusd daily chart 6/3
(click to enlarge)

what we see in the daily chart is a market that has turned from bearish to a bearish-neutral mode. Now, it looks like the consolidation or bullish correction is still in play. So if price DOES hold above 1.10, there would potentially be another corrective swing towards at least the 1.1533 pivot, with upside risk towards the 1.1750 area, where EUR/USD will likely meet the 200-day SMA and a previous support pivot from January.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at