- EUR/USD is consolidating gains from Tuesday's over two-week lows.
- Investors are eagerly awaiting details of the U.S. jobs report before placing any new directional bets.
- This setup favors bullish traders and boosts the prospects of further upside.
The EUR/USD pair struggled to capitalize on the gains recorded over the past two days and fluctuated within a narrow trading band during Friday’s Asian session, while the spot price hovered above the round figure of 1.1100 but remained largely unchanged throughout the day as traders opted to wait for the release of the US Non-Farm Payrolls (NFP) figures before placing new directional bets.
From a technical perspective, the recent recovery from the 1.1075-1.1070 area, or the two-week low recorded on Tuesday, has stalled near the 50% Fib retracement level of the latest corrective drop from the August YTD peak. That said, the overnight breakout of the 1.1090-1.1095 confluence resistance, consisting of the 38.2% Fib level and the 50-period Simple Moving Average (SMA) on the 4-hourly chart, is in favor of bullish traders.
Moreover, the oscillator on the daily chart remains in the positive territory and is still far from the overbought zone. This confirms the positive outlook and suggests that the path of least resistance for the EUR/USD pair is to the upside. However, bulls will need to wait for a sustained move above the 50% Fibonacci resistance level before making fresh bets and taking positions for further strengthening towards the 61.8% Fibonacci level around 1.1135.
The subsequent upswing should enable the EUR/USD pair to aim for a retest of the yearly high near 1.1200 recorded in August. Follow-through buying could confirm a fresh breakout, sending the EUR/USD pair further up towards the 1.1240-1.1245 intermediate barrier and towards the July 2023 swing high near 1.1275.
Meanwhile, the confluence resistance breakpoint of 1.1095-1.1090 currently appears to be acting as immediate support ahead of the 23.6% Fib level around 1.1070-1.1065. A firm break below the latter would expose the weekly low around 1.1025 touched on Tuesday, after which the EUR/USD pair would fall towards the psychological level of 1.1000. The latter should act as a critical point, a breach of which could shift the short-term bias in favor of bearish traders.
EUR/USD 4-hour chart
Economic indicators
Nonfarm Payrolls
The nonfarm payrolls report shows the number of new nonfarm jobs created in the U.S. in the previous month. U.S. Bureau of Labor Statistics (BLS). Monthly changes in employment numbers can be very volatile. This number is also subject to heavy revisions, which can also cause volatility in the currency markets. Generally, higher numbers are considered bullish for the US Dollar (USD) and lower numbers are considered bearish, but the previous month's review and unemployment rate are just as important as the main number. Therefore, the market reaction depends on how the market evaluates all the data contained in the BLS report.
