EUR/USD is squared up ahead of tomorrow’s US Non-Farm Payroll report, which will show how many jobs were added in March. Price action during the April 2nd session has given EUR/USD some key levels in the short-term to monitor after the key data point.
The 1H chart shows that after breaking above a range consolidation resistance around 1.08, EUR/USD respected the 1.08 area as support and rallied to 1.09 before stalling again. Essentially, it has set up a range between 1.08-1.09 ahead of the NFP.
The average of economists’ forecasts expect a reading of around 247K, which would be a decline from the 295K print for February, but would still be a decent data point for the jobs market. The unemployment rate is expected to be 5.5% as it was in February.
It should be noted that a strong reading in NFP is no longer going to have a significant impact on the USD because the market has priced in strong jobs data since the FOMC has projected strong jobs data. The focus have shifted to the participation rate and wage growth. Therefore, we should pay more attention to the reaction and the technical development after tomorrow’s NFP to gauge the direction of EUR/USD.
Bullish Scenario: If price closes above 1.09 after tomorrow, and then holds above 1.0840 after a subsequent pullback, then EUR/USD should be bullish in the short-term with the 1.1040-1.1050 highs in sight, as we can see in the 4H chart.
Bearish Scenario: However, if price falls back below 1.08 to close the week, pressure will be on the 1.07 handle. Below that, EUR/USD has the 1.0462 low on the year in sight, with a possible near-term support around 1.06 first. If there is a bounce from 1.06, there should be resistance around 1.08 if the EUR/USD is indeed bearish. Otherwise, the consolidation continues with messy price action, and it would be just a crap shoot trying to asses direction within the 1.0462 – 1.1040 range.
Previous Post by Author: Gold Looking Bullish Ahead of the NFP