EUR/USD Mid-Session Technical Analysis for January 7, 2022

The Euro is trading sharply higher against the U.S. Dollar at the mid-session on the heels of the December jobs report that missed expectations. The single currency soared and the greenback weakened after the U.S. Labor Department said non-farm payrolls rose by 199,000 last month, well short of the 405,000 estimate.

At 18:28 GMT, the EUR/USD is trading 1.13583, up 0.0060 or +0.53%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at 105.55, up $0.62 or +0.59%.

The entire report wasn’t a complete disaster as the underlying components appeared sturdier, with the unemployment rate falling to 3.9% against expectations of 4.1% while earnings rose by 0.6%.

The report was strong enough to drive up expectations the Federal Reserve will begin to hike interest rates at its March meeting, with futures on the federal funds rate implying a 90% chance of a hike, up from 80% on Wednesday.

The Euro strengthened against the dollar despite showing little reaction to data showing Euro Zone inflation rose to 5% in December.

Euro Zone policymakers have said they expect inflation to gradually slowdown in 2022 and a rate hike will likely not be needed this year.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1386 will change the main trend to up. A move through 1.1272 will signal a resumption of the downtrend.

The short-term range is 1.1386 to 1.1272. The EUR/USD is trading on the strong side of its retracement zone at 1.1343 to 1.1329, making it support.

The best support is the Fibonacci level at 1.1291, followed by a short-term Fibonacci level at 1.1262.

On the upside, the nearest resistance is a long-term 50% level at 1.1397, followed by another 50% level at 1.1439.

Short-Term Outlook

The direction of the EUR/USD into the close on Friday is likely to be determined by trader reaction to 1.1343 and 1.1343.

Look for the intraday upside bias to continue as long as the EUR/USD holds above 1.1343. If this move creates enough late session upside momentum then look for a surge into 1.1386, followed closely by 1.1397.

A sustained move under 1.1329 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to extend into 1.1317, followed by 1.1291. The latter is controlling the near-term direction of the EUR/USD.