James Hyerczyk
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The Euro is trading lower shortly before the U.S. opening and the release of the U.S. Non-Farm Payrolls report at 1230 GMT. Short-term, the dollar is being driven higher by safe-haven buying tied to the escalation in trade tensions between the United States and China. The greenback is also being supported by Wednesday’s hawkish U.S. Federal Reserve monetary policy statement which widens the divergence with the relatively dovish European Central Bank.

At 0821 GMT, the EUR/USD is trading 1.1572, down 0.0011 or -0.10%.

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Earlier this week, President Trump proposed additional tariffs on China to force them to the negotiating table, but China vowed on Thursday to retaliate if the United States acted on the threat to raise tariffs on the Asian nation’s exports, fueling fears in financial markets that the trade war between the world’s two biggest economies would escalate.

Later today at 1230 GMT, the U.S. will release its latest Non-Farm Payrolls report. The Non-Farm Employment Change is expected to show an increase of 190K. The unemployment rate is expected to decline to 3.9% and Average Hourly Earnings are expected to come in at 0.3%, up from 0.2%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out 1.1621. This is new resistance. The downtrend was reaffirmed when sellers drove the market through the next swing bottom at 1.1575 earlier today.

The EUR/USD is only down three days from the last swing bottom, we can’t expect a major closing price reversal bottom, but we could see a minor reversal bottom if short-sellers decide to take profits or pare positions after the report or ahead of the week-end.


Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to the previous main bottom at 1.1575.

A sustained move under 1.1575 will indicate the presence of sellers. It will also mean that sellers are defending this old bottom. If the downside momentum increases, we could see a drive into the June 28 main bottom at 1.1527 and the June 21 main bottom at 1.1509.

Overcoming 1.1575 will indicate the selling is getting weaker. Overtaking 1.1585 will turn the EUR/USD higher for the session. This will indicate the short-covering is getting stronger. If this move creates enough upside momentum, we could see a rally into a steep downtrending Gann angle at 1.1627.

Basically, watch the price action and read the order flow at 1.1575 to 1.1585. Trader reaction to this area will set the tone for the rest of the session. Look for an upside bias to develop on a sustained move over 1.1585 and for the downside bias to continue on a sustained move under 1.1575.

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