EUR/USD Mid-Session Technical Analysis for March 8, 2017

The EURUSD is trading lower at the mid-session on light volume. The intraday activity is consolidating after sellers took out yesterday’s low on the daily chart. Traders are attempting to hold the market in a range ahead of Thursday’s European Central Bank monetary policy decision and a post-meeting press conference by ECB President Mario Draghi.

Euro to Dollar investors are also waiting patiently for Friday’s U.S. Non-Farm Payrolls report that is expected to come in strong enough to greenlight a 25 basis point rate hike by the Fed on March 15. However, investors should not only watch the headline number, but also the Average Hourly Earnings portion of the report. This is the number that could cause the volatility.

As far as the ECB and Draghi are concerned, investors not only want to know about the future of stimulus, but also how the ECB will respond to the start of the Brexit negotiations and the European elections.

So essentially, a lot of information will be flowing over the next two days so investors should start preparing for volatility and the possibility of a violent two-sided response to the news. No one is sure how much of the rate hike has already been built into the U.S. Dollar. So it’s not a given that the EURUSD will break if the jobs number is bullish.

Technical Analysis

The main trend is up on the daily swing chart. The trend turned up last week on the move through 1.0630. Since we’ve fallen back below the breakout level, we have to assume the move was triggered by short-covering rather than new buying. Given the fundamentals, investors may be backing away from buying strength, choosing instead to wait for a pullback into a value area.

The short-term range is 1.0494 to 1.0640. Its retracement zone and possible value area is 1.0567 to 1.0550. This zone is currently being tested. Trader reaction to this zone could determine whether the Euro resumes the uptrend, or if it breaks back under 1.0494.

On the upside, standing in the way are 50% levels at 1.0583 and 1.0606.

Forecast

Based on the current price at 1.0552, the direction of the Euro to Dollar the rest of the session will likely be determined by trader reaction to the Fib level at 1.0550.

A sustained move over 1.0550 will likely lead to a labored rally today with so much overhead resistance at 1.0567, 1.0583 and 1.0606. Gann angle resistance comes in at 1.0588, 1.0600, 1.0620 and 1.0630. The latter is the last potential resistance angle before the 1.0640 main top.

If 1.0550 fails as support then look for a quick move into the next uptrending angle at 1.0534. This is followed by the major Fib level at 1.0526 and another angle at 1.0514. This is the last potential support angle before the 1.0494 main bottom.