EUR/USD Mid-Session Technical Analysis for May 6, 2016

The EUR/USD is trading slightly better at the mid-session and shortly before the release of the U.S. Non-Farm Payrolls report for April. The report is expected to show the economy added 203K jobs. The unemployment rate is expected to remain at 5.0% and Average Hourly Earnings are expected to come in unchanged at 0.3%.

Technically, the main trend is up according to the daily swing chart, however, momentum has been to the downside all week with the Forex pair retracing a little more than 50% of its last rally.

The main range is 1.1214 to 1.1616. Its retracement zone at 1.1415 to 1.1368 was the primary downside target. This zone was tested successfully yesterday and earlier today. This came as no surprise since the trend is up and buyers tend to treat a test of this zone as a buying opportunity and short-sellers tend to treat it as a profit-taking zone.

Based on the current price at 1.1422, the direction of the market the rest of the session will likely be determined by trader reaction to the 50% level at 1.1415.

A sustained move over 1.1415 will indicate the presence of buyers. This could create enough upside momentum to challenge the next upside targets at 1.1487 and 1.1496. There could be selling pressure on the first test of this area. However, 1.1496 is also the trigger point for an acceleration into the next angle at 1.1556.

A sustained move under 1.1415 will signal the presence of sellers. The first target is an uptrending angle at 1.1394. This angle was tested successfully earlier today.

Taking out 1.1394 will indicate the selling is getting stronger with the next target the Fibonacci level at 1.1368.

Holding below 1.1368 could trigger an even sharper break into the next uptrending angle at 1.1304.

Watch the price action and read the order flow at 1.1415 all day. Trader reaction to this level will tell us if the bulls have regained control or if the sellers are increasing pressure.