EUR/USD Mid-Session Technical Analysis for May 4, 2018

The EUR/USD is trading slightly lower shortly before the release of the U.S. Non-Farm Payrolls report.

According to estimates, nonfarm payrolls likely increased by 192,000 jobs in April after rising 103,000 in March. The unemployment rate is expected to drop to 4.0% from 4.1%. Average Hourly Earnings are expected to show a rise of 0.2%, down from 0.3%.

After the initial reaction to the report, several Federal Open Market Committee members are scheduled to speak. They could move the markets if there comments touch on the timing of future rate hikes. Specifically investors want to know if the Fed will raise interest rates 2 or 3 more times in 2018.

The combination of the jobs report and the Fed speakers could create volatility today. Anything in the report that points toward higher inflation will support the Fed’s case for raising interest rates. This will make the dollar a more attractive investment and at the same time drive the Euro lower.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The EUR/USD is not in a position to change the main trend to up, but there is room for a meaningful short-covering rally or perhaps a closing price reversal bottom.

A trade through 1.1937 will signal a resumption of the downtrend. On the upside, the first targets are the 2017 close at 1.2001 and a Fibonacci level at 1.2037. A pair of 50% levels at 1.2136 and 1.2166 provides additional resistance.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to 1.2001.

Overtaking 1.2001 will signal the presence of buyers. This could drive the market into 1.2037. Overtaking this level with rising volume could generate the upside momentum needed to challenge 1.2136 to 1.2166.

A sustained move under 1.2001 will indicate the presence of sellers. If this move attracts enough sellers then look for the move to extend into 1.2937 then 1.1915.

The main bottom at 1.1915 is the trigger point for an acceleration to the downside since the next major targets don’t come in until 1.1736 and 1.1717.