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EUR/USD Technical Analysis: Euro Erases Half of Post-NFP Rally

EUR/USD Technical Analysis: Euro Erases Half of Post-NFP Rally

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro finds resistance above 1.14 vs. US Dollar, erases half of post-NFP rise
  • Risk/reward parameters argue against establishing short position for now

The Euro reversed sharply lower against the US Dollar, producing the largest two-day losing streak in nearly four monthsafter finding resistance above the 1.14 figure. Prices have now erased over half of the advance triggered by May’s soft US jobs data.

From here, a daily close below support at 1.1217, the 38.2% Fibonacci expansion, opens the door for a test of the 1.1145-56 area marked by a rising trend line set from December 2015 and the 50% level. Alternatively, a reversal above the 23.6% Fib at 1.1293 paves the way for a test of the 14.6% expansion at 1.1340.

An actionable trade setup appears to be absent at this time. On one hand, prices are too close to support to justify entering short from a risk/reward perspective. On the other, the absence of a discrete bullish reversal signal suggests taking up the long side is premature. Waiting on the sidelines appears to be prudent.

Losing money trading EUR/USD? This might be why.

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