EUR/USD Consolidating Above Crucial Support Post NFP

Key Highlights

  • The Euro started a downside correction after trading above 1.1500 against the US Dollar.
  • There is a significant support formed near the 1.1420 level on the 4-hours chart of EUR/USD.
  • The US Nonfarm Payrolls in Jan 2019 came in at 304K, much better than the 165K forecast.
  • The US Factory Orders figure for Nov 2018 will be released today, which could increase 0.2% (MoM).

EURUSD Technical Analysis

The Euro recovered recently and traded above the 1.1420 and 1.1480 resistance levels against the US Dollar. The EUR/USD pair traded above the 1.1500 level before starting a downside correction.

EURUSD Technical Analysis Euro US Dollar

Looking at the 4-hours chart, the pair traded as high as 1.1514 and later dipped below the 1.1500 and 1.1480 levels. The pair also declined below the 23.6% Fib retracement level of the last wave from the 1.1289 low to 1.1514 high.

On the downside, there is a strong support formed near 1.1420 and a connecting bullish trend line on the same chart. More importantly, the 100 (red) and 200 (green) simple moving average (4-hours) are placed near the 1.1420 level to act as a support.

Finally, the 50% Fib retracement level of the last wave from the 1.1289 low to 1.1514 high is near 1.1400 to provide support if the pair dips below 1.1420. Should there be a downside break below 1.1400, the pair could decline towards the 1.1350 level in the coming sessions.

On the upside, an initial resistance is at 1.1505, above which the pair will most likely trade above 1.1515 and 1.1525 in the near term.

Fundamentally, the US Nonfarm Payrolls figure for Jan 2019 was released this past Friday by the US Department of Labor. The market was looking for a sharp decline in the NFP from the last reading of 312K to 165K.

The actual result was much better than the forecast as the US NFP increased 304K in Jan 2019. However, the last reading was revised down from 312K to 222K.

US NFP 2019

The report stated:

Total nonfarm payroll employment increased by 304,000 in January, and the unemployment rate edged up to 4.0 percent. Job gains occurred in several industries, including leisure and hospitality, construction, health care, and transportation and warehousing.

Overall, the data was mixed, but mostly supported the US Dollar. EUR/USD and GBP/USD declined slightly, but they are still trading above important support levels.

Economic Releases to Watch Today

  • Euro Zone PPI for Jan 2019 (YoY) – Forecast +3.3%, versus +4.0% previous.
  • Euro Zone PPI for Jan 2019 (MoM) – Forecast -0.6%, versus -0.3% previous.
  • US Factory Orders Nov 2018 (MoM) – Forecast +0.2%, versus -2.1% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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