The Euro has been incredibly strong in recent weeks, however a large element of that has been the USD weakness. With the strong NFP data on Friday, we saw some strength come back into the USD. The issue for traders is trying to determine which way momentum will go early in the week. As a result we are looking for a more conservative entry and exit.
We are looking for a pullback to 1.1750 with our initial profit target is 1.1800.
Should price break below the 1.17250 level, we have to assume the USD momentum is gaining traction and might need to adjust our short term bias.
EUR/USD 30 min Chart - EUR/USD which way will momentum go?
Last Week - Big Beat with NFP
The USD has been the real struggler over the last few weeks and has been a major driver behind all the major currency pairs.
On Friday we got another glimpse into the state of the US economy and as it turned out it was a strong result. The headline number of new jobs created for the prior month came in at 209K (vs 183K expected).This was a big win for the Trump camp and Janet Yellen, who have been looking for signs of a turnaround.
On Monday Goldman came out and said that the employment figures were pleasing however they still expect a 60% chance of a rate hike before December.
We managed to test the 1.1700 level early in the week however it didn’t hold until after the FOMC. As it stands the EUR/USD is trading around 1.1800 as trade begins for the week.
Key for the Week - NFP Fallout
Early in the week we’ll be looking for signs of USD momentum and we have some FOMC speakers that might add some weight to the employment data. Later in the week there’s PPI from the US as well as CPI readings from across the Eurozone as well as the US.
Technical Analysis - The key Levels
The EUR/USD is going to be a matter of wait and see. If we can break through 1.1800 and hold comfortably then we have the potential to retrace back towards pre-NFP levels.
If the USD gains momentum in early US trade, then we are going to look for a retest of 1.1750 in the short term.
EUR/USD - 30 min Chart - Key short term support and resistance
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