EUR/USD Forex Technical Analysis – Investors Vigorously Defending Major Fibonacci Level at 1.1185

The Euro finished lower on Friday, but inside Friday’s range. The price action suggests investor indecision and impending volatility. It also reflects trader reaction to the mixed U.S. Non-Farm Payrolls report.

In the employment report released on Friday, non-farm payrolls rose by 196,000 jobs versus estimates of 172,000. The previously reported 20,000 increase last month was raised to 33,000. The unemployment rate remained at 3.8 percent as expected. However, wage gains also slowed in March and more people dropped out of the labor force. Furthermore, hourly earnings increased by four cents, or 0.1 percent in March after jumping 0.4 percent in February.

The Euro posted an inside move because the jobs report was essentially mixed. The headline number was a little higher than expected, February’s number was revised higher, but the dip in average hourly earnings was a disappointment.

On Friday, the EUR/USD settled at 1.1215, down 0.0005 or -0.05%.

Daily Swing Chart Technical Analysis

Last week, the EUR/USD survived a test of its March 7 bottom at 1.1176, posting its low for the week at 1.1183.

The new minor bottom is 1.1183. After hitting this level, the EUR/USD rallied to 1.1255 before posting two inside days. Taking out 1.1255 will shift momentum to the upside.

The major, long-term range is 1.0339 to 1.1255. Its 50% to 61.8% retracement zone is 1.1447 to 1.1185. The EUR/USD has been trading inside this range since early February. The March 7 main bottom at 1.1176 and the April 2 minor bottom at 1.1183 were essentially successful tests of the Fibonacci level at 1.1185.

The March 20 main top at 1.1448 was essentially a successful test of the 50% level at 1.1447.

This retracement zone is controlling the longer-term direction of the EUR/USD and this is why it is being defended vigorously.

If a main range develops between 1.1448 and 1.1183, then look for a retracement into its retracement zone at 1.1316 to 1.1347.

Daily Swing Chart Technical Forecast

Based on Friday’s close at 1.1215, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the minor top at 1.1255 and the minor bottom at 1.1183. Holding inside this range will indicate investor indecision.

Bullish Scenario

Taking out 1.1255 will indicate the presence of buyers. If this move generates enough upside momentum then look for an eventual rally into 1.1316 to 1.1347.

Bearish Scenario

The next move to the downside will come in three parts. First, the selling has to be strong enough to cross to the bearish side of 1.1185. This should quickly challenge 1.1183 then 1.1176.

If 1.1176 fails then look for the selling pressure to eventually extend into the June 20, 2017 main bottom at 1.1118 and the May 20, 2017 main bottom at 1.1109.