Talking Points:
- EUR/USD Consolidates Ahead of NFP
- Current Daily Resistance is Found at 1.0685
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After declining as much as much as 114 pips in yesterday’s trading, the EUR/USD is still consolidating ahead of tomorrow’s NFP (Non-Farm Payroll) employment data release. Tomorrow news is expected in at a reported 180k, however any deviation from this value may increase market volatility and cause the EUR/USD to break from its daily range.
Technically, the range is defined by the previous swing high put in place on November 28th at a price of 1.0685. This value should be considered as a point of resistance, and in the event that the EUR/USD breaks higher it may suggest a shift from the pair’s ongoing daily downtrend. In this scenario, traders may consider looking for fresh buy entries as the US Dollar begins to sell off during the news.
EUR/USD, Daily Chart and Resistance
(Created Using TradingView Charts)
In the event that prices breakout lower under 1.0518, the EUR/USD would be set to continue its ongoing downtrend. It should be noted here that the EUR/USD declined as much as 781 pips in the month of November. If this bearish scenario plays out, not only would the pair be trading at 2016 lows but also challenging the 2015 low of 1.0457.
The final scenario that should be considered ahead of tomorrow’s NFP event is that prices may continue to consolidate. Today’s trading marks the 10th day of consolidating price action, and if the EUR/USD fails to breakout higher or lower it may mean further consolidation still. In this scenario, traders may elect to trade the range based strategy of their choosing as long as support and resistance remain valid.
--- Written by Walker, Analyst for DailyFX.com
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