The euro drifted lower during the trading session on Wednesday to reach the crucial 50-Day EMA and take a little bit of a move below the 1.08 level during the day. Whether or not we can continue to break down remains to be seen, especially considering that the 200-Day EMA sits just below. This doesn’t mean that we can break down, just means that there is a significant amount of technical support underneath, and it is probably worth noting that the Non-Farm Payroll announcement comes out on Friday, meaning that the next couple of days will probably be focusing on that announcement, and perhaps even more specifically, the way that the market reacts to the data, which will more likely than not be enhanced and driven by the bond market and what happens with yields.
The market recently had tried to break above the 1.10 level, with the 61.8% Fibonacci level backing it up that area has potential resistance as well. That being said, you can also say that from the bounce, we are getting close to the 50% Fibonacci level, while not a proponent of Fibonacci trading, I do recognize that it will enter the picture for quite a bit of the trading public. You can make an argument for both directions at the moment, but I think in the short term we are getting a little oversold and it does look like there’s a bit of support in this general vicinity.
As we get through the jobs number on Friday, then we start to focus on holidays, meaning that liquidity is probably going to be a bit of an issue. With that being the case, I think we could have erratic moves after that announcement. Between now and then, I think it probably is more or less going to be a situation where we are calming down, and stabilizing as we wait to see what the Bureau of Labor Statistics has to tell us. If we can break above the 1.0850 level, that would obviously be a bullish sign, but if we break down below the 200-Day EMA, that would be rather negative.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.