EUR/USD Forex Technical Analysis – Reaction to 1.0196 Pivot Sets Tone into Close

The Euro is edging higher against the U.S. Dollar on Thursday as traders prepare for Friday’s U.S. Non-Farm Payrolls report that could offer clues as to the size of the Federal Reserve’s next interest rate hike at its September 21 policy meeting.

Ahead of the NFP report, the U.S. released its Weekly Unemployment Claims report earlier today. The report showed initial claims for unemployment insurance totaled 260,000 last week, near the highest level since November amid a shift in the U.S. labor market.

The total for the week ended July 30 was in line with the Dow Jones estimate but a gain of 6,000 from the previous week’s downwardly revised level, the Labor Department reported Thursday.

At 16:45 GMT, the EUR/USD is trading 1.0235, up 0.0066 or +0.65%. The Invesco Currency Shares Euro Trust ETF Trust ETF (FXE) settled at $94.44, up $0.47 or +0.50%.

The Euro isn’t really stronger today, but the U.S. Dollar is weaker. Traders said the greenback is being pressured as the positive impact of hawkish Federal Reserve comments from earlier in the week faded.

Instead, investors have chosen to wait for more signs on the data front to confirm that more rate hikes to curb inflation were coming. In other words, the movement in the U.S. Dollar until the Fed makes its interest rate decision on September 21 is going to be data dependent.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.0294 will reaffirm the uptrend. A move through 1.0097 will change the main trend to down.

The minor range is 1.0097 to 1.0294. The EUR/USD is currently trading on the strong side of its pivot at 1.0196, making it support.

On the downside, short-term support is the retracement zone at 1.0123 to 1.0083.

On the upside, the nearest resistance is a 50% level at 1.0284, followed by a retracement zone at 1.0363 to 1.0460.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at 1.0196 is likely to determine the direction of the EUR/USD into the close on Thursday.

Bullish Scenario

A sustained move over 1.0196 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the resistance cluster at 1.0284 to 1.0294. Taking out 1.0294 will strong volume could trigger an acceleration into 1.0363.

Bearish Scenario

A sustained move under 1.0196 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the support cluster at 1.0123, followed by a second support cluster at 1.0097 to 1.0083.

A trade through 1.0097 will change the main trend to down, but a move through 1.0083 will trigger an acceleration to the downside.