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EUR/USD: Post-ECB Recovery to Face U.S. NFP

EUR/USD: Post-ECB Recovery to Face U.S. NFP

Michael Boutros, Strategist

Talking Points

EUR/USD Daily

EURUSD Daily Chart

Technical Outlook: The key focus range for Euro remains 1.0527-1.0620 heading into tomorrow’s U.S. Non-Farm Payrolls report. A breach of this region puts into focus key resistance & broader bearish invalidation at 1.0661 where the 100-day moving average converges on the 50% retracement and slope resistance. A close above this region would be needed to keep the long-bias in play and would suggest a larger-scale recovery is underway in the Euro. Keep in mind that if we close at these levels, the pair will have completed an outside-day reversal off key Fibonacci support (near-term constructive). Critical support remains steady at 1.0455/62 – a region defined by the confluence of the 2015 lows, the 1/11 swing low, the 76.4% retracement and the median-line extending off the January high.

EUR/USD120min

EURUSD 120min Chart

Notes: Today’s post-ECB high registered just pips above the weekly open before pulling back, further highlighting the near-term significance of the 1.0527-1.0620range- look for the break (Ultimately, a breach is favored). From a trading standpoint, heading into NFPs I would be interested in fading strength towards 1.0661on a spike OR buying a more significant dip down towards key confluence support at 1.0455/62.

  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short EURUSD- the ratio stands at -1.06 (48% of traders are long)- weak bullish reading
  • Long positions are 8.8% lower than yesterday and 15.4% below levels seen last week
  • Short positions are 0.3% higher than yesterday and 17.9% above levels seen last week
  • Open interest is 4.3% lower than yesterday and 17.7% below its monthly average
  • While the current SSI profile continues to point higher, it’s worth noting that the recent narrowing in the ratio (flip to net-short) on falling open interest shows the retail crowd may be t thinning out here. Look for this dynamic to mature in the coming days with a further build in short positions / open interest to suggest that a more meaningful low may be in place.

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Relevant Data Releases

Looking for trade ideas? Review DailyFX’s 2017 1Q Projections

Other Setups in Play:

Written by Michael Boutros, Currency Strategist with DailyFX Follow Michael on Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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