EUR/USD Forex Technical Analysis – Trader Reaction to 1.1242 Determines Today’s Direction

The Euro is trading slightly lower against the U.S. Dollar early Friday, which could be just some light profit-taking ahead of the release of the U.S. Non-Farm Payrolls report at 13:30 GMT.

The Euro should soar if the data comes in weaker than expected. We could see a slight setback if the numbers are stronger than expected, but it shouldn’t be enough to derail the uptrend. Traders are fairly confident that future economic data will worsen with the spread of coronavirus. Furthermore, investors are pricing in another 25-basis point rate cut by the U.S. Federal Reserve when it makes its interest rate decision on March 18.

At 05:32 GMT, the EUR/USD is trading 1.1236, down 0.0006 or -0.06%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the August 6, 2019 main top at 1.1250 will reaffirm the uptrend.

The main trend will change to down on a move through 1.0778. This is highly unlikely, but due to the prolonged move up in terms of price and time, traders should be aware that a lower close will produce a closing price reversal top and this will indicate the selling is greater than the buying at current price levels. Furthermore, it could lead to the start of a two to three day break or a 50% to 61.8% retracement of its current rally.

The main range is 1.1413 to 1.0778. Its retracement zone is 1.1170 to 1.1096. This zone is support. Holding above this zone is helping to generate the strong upside bias. It is essentially controlling the near-term direction of the EUR/USD.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1236, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to yesterday’s close at 1.1242.

Bullish Scenario

A sustained move over 1.1242 will indicate the presence of buyers. Crossing to the strong side of the August 6, 2019 main top at 1.1250 will indicate the buying is getting stronger. This could trigger a surge into the July 11, 2019 main top at 1.1286. This is a potential trigger point for an acceleration to the upside with the next major target the June 25, 2019 main top at 1.1413.

Bearish Scenario

A sustained move under 1.1242 will signal the return of sellers. If this move creates enough downside momentum then the EUR/USD could break back to the Fibonacci level at 1.1170. This is another trigger point for an acceleration into the 50% level at 1.1096.