EUR/USD Risk On Formed The Gap Over The Weekend

Rising tension between the North Korea and the US led to safe haven vs risk flows into many currency pairs this weekend and the EUR/USD has formed a retail gap (blue rectangle) to the upside. Risk on is usually reflected on AUD, CAD, NZD and JPY pairs while the USD was defensive in the past.

At this point, the pair is capped below D H3/WH3 suggesting either a retrace or continuation. If the pair retraces to 1.1840-56 (88.6, trend line, L3, ATR pivot, retail gap) the gap will be closed and it could spike upside. 1h momentum or 4h close above 1.1900 is needed for a continuation towards 1.1930, 1.1967 and retest of 1.2000. Adding to a possible bullish bias is lower than expected NFP with Average Hourly earnings data that were released on Friday.

Daily technical analysis is written by Nenad Kerkez, a senior analyst at Admiral Markets