James Hyerczyk
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The Euro is trading higher against the U.S. Dollar after Friday’s U.S. jobs report suggested that some traders may have over-exaggerated a stronger recovery from the coronavirus pandemic.

The single-currency posted its biggest daily gain in two weeks after the report did more to encourage short-term traders to adjust long-dollar and short-Euro positions than it changed the economic outlook for a U.S. recovery that is stronger than peers.

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At 17:25 GMT, the EUR/USD is trading 1.2040, up 0.0078 or +0.65%.

The U.S. Non-Farm Payrolls report showed employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money to aid the recovery from the COVID-19 pandemic.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1952 will signal a resumption of the downtrend.

A trade through 1.2190 will change the main trend to up. This is highly unlikely today, but the EUR/USD is currently trading higher after hitting a 10-day low, suggesting a potentially bullish closing price reversal bottom may be forming.

The main range is 1.1800 to 1.2349. The EUR/USD is currently trading inside its retracement zone at 1.2074 to 1.2010.

The minor range is 1.2190 to 1.1952. Its retracement zone at 1.2071 to 1.2099 is the next upside target area.


Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD into the close is likely to be determined by trader reaction to the main Fibonacci level at 1.2010.

Bullish Scenario

A sustained move over 1.2010 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into 1.2071 to 1.2099. Since the main trend is down, sellers could come in on a test of this area.

Bearish Scenario

A sustained move under 1.2010 will signal the presence of sellers. This could lead to a retest of the intraday low at 1.1952.

Side Notes

A close over 1.1963 will form a closing price reversal bottom. If confirmed, this could lead to the start of a 2 to 3 day counter-trend rally with 1.2071 to 1.2099 the first upside target zone.

This move will not signal a change in trend, but a trade through 1.2190 will change the trend to up.

For a look at all of today’s economic events, check out our economic calendar.

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