Forex Technical Update

Previous: EUR/USD Retreats After ECB Press Conference; Still Bullish? (9/6)

Official NFP Release:

EUR/USD 1H Chart 9/7/2012 9:05AM EDT


EUR/USD bullish ahead of the Non-Farm Payroll: In the previous update, I noted the EUR/USD remaining in a bullish stance even after a dip during the ECB press conference on Thursday (9/6). The euro continued to rally against the us dollar during the 9/6 session ahead of the US Non-Farm Payroll release.

NFP reaction: According to the Bureau of Labor Statistics, there were only 96K jobs added jobs in August, down from an already revised down 143K in July, and missing economists' forecast of 123K according to ForexFactory. As noted in the previous update, number below 100K can be bad enough to elevate expectations of QE3, which is why the USD is getting battered, and why there is a flow into the JPY as a safe haven instead, as well as gold and silver.

The 1H chart shows the market accelerating higher after the release, pushing above a rising channel resistance. It has also broken a resistance pivot at 1.2750, seen in the daily chart as the EUR/USD's June high.

Resistance ahead: In the daily chart you also see the RSI pushing at 70, showing there is bullish momentum, which price action has already shown, rallying in a rising channel since late July. However, the EUR/USD is about to meet another couple of resistance factors.

1) 200-day SMA at 1.2840
2) A declining trendline that goes back to the Feb highs near 1.3485. A sharp rally can test this also near the 1.2840 area.

Breakout Scenario: Clearing 1.2850 will be a feat for the euro-bulls. The bullish breakout scenario exposes the 1.2970-1.3005 area, which was the support area of a consolidation period basically from February to the breakdown in May. This bullish target will probably require confirmation of this QE expectation in next week's FOMC policy meeting on Thursday (9/13).

Resistance turned support: If there is a throwback, remaining above 1.27 would be a very strong sign of bullish price action, but I think it can push down to the 1.26-1.2620 area and still be within the scope of the bullish outlook. A push below 1.2580 makes the bullish attempt seem weak, but only a break below 1.25 at this point should introduce any bearish outlook outside of the near-term.

EUR/USD Daily Chart 9/7/2012 9:20AM EDT


Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.