EUR/USD Forex Technical Analysis – Bullish Over 1.1291, Bearish Under 1.1262

The Euro is trading flat early Friday as investors await the release of the U.S. Non-Farm Payrolls report that could solidify the chances of the Federal Reserve’s first rate hike in March.

The single-currency has been supported all week as rising U.S. Treasury yields drove ten-year bond yields in the Euro area near their highest levels in around two months.

At 07:10 GMT, the EUR/USD is trading 1.1302, up 0.0004 or +0.03%. On Thursday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $104.93, down $0.20 or -0.19%.

The trade in money market futures suggest investors have brought forward bets on when the Federal Reserve will start hiking U.S. interest rates, with a 25 bps rise fully priced in for May. If today’s Non-Farm Payrolls report is perceived as bullish then look for traders to price in a 25 bps rise for March.

While the European Central Bank (ECB) is not expected to follow any time soon, it too has started to dial back its massive post-pandemic bond-buying stimulus.

Later today at 13:30 GMT, the U.S. government will release its labor market report for December. The Non-Farm Employment Change is expected to show the economy added 426K jobs. The Unemployment Rate is expected to drop from 4.2% to 4.1% and Average Hourly Earnings are expected to show a 0.4% increase for the month.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1272 will signal a resumption of the downtrend. Taking out 1.1386 will change the main trend to up.

On the downside, support is the long-term Fibonacci level at 1.1291, followed by the short-term Fibonacci level at 1.1262. This is a potential trigger point for an acceleration to the downside.

On the upside, the nearest resistance is a minor retracement zone at 1.1329 to 1.1343.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Friday is likely to be determined by trader reaction to 1.1291.

Bullish Scenario

A sustained move over 1.1291 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into 1.1329 to 1.1343.

Taking out Wednesday’s high at 1.1347 could trigger an acceleration to the upside with 1.1386 the next likely upside target.

Bearish Scenario

A sustained move under 1.1291 will signal the presence of sellers. This could trigger a break into 1.1272, followed by 1.1262. This is a potential trigger point for an acceleration to the downside with the next target a pair of main bottoms at 1.1235 and 1.1222.