EUR/USD Trying to Build Support Base Between 1.0472 – 1.0642

The EUR/USD is inching higher at the mid-session on Friday, boosted by European Central Bank (ECB) members talking up a return to positive rates this year.

A weaker U.S. Dollar also provided some support as investors focused on how aggressive the Federal Reserve will be in hiking rates as it tackles rising inflation.

At 17:22 GMT, the EUR/USD is at 1.0546, up 0.0007 or +0.07%. The Invesco CurrencyShares Euro Trust ETF (FXE) is trading $97.72, down $0.01 or -0.01%.

The single currency was lifted by comments made by French central bank chief Francois Villeroy de Galhau, who said the ECB should raise its deposit rate back into positive territory this year.

The ECB has been moving slowing to remove support this year, but record inflation has prompted more members to call for action.

In the U.S., data on Friday showed that U.S. job growth increased more than expected in April. Average hourly earnings increased 0.3% after advancing 0.5% in March. That lowered the year-on-year increase in wages to 5.5% from 5.6% in March.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0642 will change the main trend to up. A move through 1.0472 will signal a resumption of the downtrend.

The minor range is 1.0472 to 1.0642. The EUR/USD is currently straddling its pivot at 1.0557.

The short-term range is 1.0936 to 1.0472. If the main trend changes to up then its retracement zone at 1.0704 to 1.0759 will become the next upside target.

Short-Term Outlook

The direction of the EUR/USD into the close on Friday will be determined by trader reaction to 1.0557.

Bullish Scenario

A sustained move over 1.0557 will indicate the presence of buyers with 1.0642 the next target. Overtaking this level could create the upside momentum needed to challenge the retracement zone at 1.0704 to 1.0759.

Bearish Scenario

A sustained move under 1.0557 will signal the presence of sellers with 1.0472 a target. This is also a potential trigger point for an acceleration into the January 3, 2017 main bottom at 1.0339.