EUR/USD Forex Technical Analysis – Tight Range as Traders Await Key Labor Market Data from ADP

The Euro is trading nearly flat against the U.S. Dollar on Thursday as a firm message from the Fed that it won’t be cutting interest rates any time soon offset optimism around China’s phasing out of COVID restrictions.

News that China’s mainland border with Hong Kong will be reopened after three years had sent a positive message to investors, but with both the dollar and bond market borrowing costs higher post-Fed, the Euro is struggling to keep up.

At 11:30 GMT, the EUR/USD is trading 1.0605, up 0.0001 or +0.01%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $97.85, up $0.46 or +0.47%.

The price action ahead of yesterday’s Fed minutes suggested that most traders were expecting a hawkish message and the Fed delivered one. Meanwhile, today’s subdued trade indicates that the next major move is likely to be fueled by Friday’s major U.S. Non-Farm Payrolls report.

The U.S. labor market will be a big factor in how high inflation remains this year. A strong print in Friday’s report will keep the Fed on course for a 50 basis point rate hike at the next Fed meeting.

Looking Ahead…

A series of Fed speakers are due to make remarks as the week continues, with St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic expected to speak on Thursday.

On the data front, balance of trade figures for November are due to be released on Thursday along with weekly jobless claims and the ADP private sector jobs report.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0520 will signal a resumption of the downtrend. A move through 1.0795 will change the main trend to up.

The EUR/USD is currently straddling a short-term pivot at 1.0619. On the upside, the nearest resistance is a pivot at 1.0658. On the downside, the closest support is another 50% level at 1.0542.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at 1.0619 is likely to determine the direction of the EUR/USD on Thursday.

Bearish Scenario

A sustained move under 1.0619 will indicate the presence of sellers. This could trigger a break into a support cluster at 1.0542 – 1.0520. The latter is a potential trigger point for an acceleration to the downside with 1.0443 the next potential target.

Bullish Scenario

A sustained move over 1.0619 will signal the presence of buyers with 1.0658 the next likely target. This is a potential trigger point for an acceleration to the upside with 1.0795 the next major target.