In case you weren’t around during the U.S. session, you should know that the U.S. dollar is pulling back some of its gains after the U.S. ADP report disappointed the market’s expectations.
Of course, it’s also possible that USD bulls used the report to take some of their profits off the table ahead of the U.S. NFP release.
EUR/USD found support around the 1.0450 new intraweek lows and is currently trading closer to the 1.0500 major psychological handle.
Is this the start of EUR/USD finally ending its months-long downtrend? Or is EUR/USD just taking a breather before it extends its trend?
EUR/USD 1-hour Forex Chart by TV
Earlier today, we saw Germany’s trade balance and France’s industrial production data come in better than market expectations.
EUR/USD doesn’t seem to benefit much from the stronger-than-expected releases, though, as the pair continues to turn lower from its 1.0525 highs.
Coincidentally, the 1.0525 area is also not far from last week’s intraweek lows and today’s 38.2% Fibonacci retracement and 100 SMA levels.
If you’re one to watch volatility, a move to 1.0525 also means that the pair has turned lower after rising by half of its daily average volatility.
Think this means EUR/USD is game for more losses?
Shorting at current levels or somewhere closer to the 1.0530 intraday highs may present a good trade opportunity if you expect the U.S. dollar to extend its gains against major counterparts.
EUR/USD may find sellers from the 100 SMA rejection and see bearish candlesticks all the way to its previous lows near 1.0450.
If EUR/USD doesn’t see a bearish momentum in the next trading sessions, then you should also consider staying in the sidelines ahead of the U.S. NFP report.
The U.S. NFP Event Guide suggests that the actual numbers won’t diverge much from market expectations. Still, volatility may get crazy around the report’s release and take you your stop losses if you’re not careful.
Good luck and good trading this setup!
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