The euro rebounded from the 50-period SMA, slightly above the key support level of 1.1030 as investors looked ahead of the US ADP Employment Change report and the all-important NFP report, as well as some mixed European data, including today’s Retail Sales and tomorrow’s German Factory Orders.
The EUR/USD pair has been in an upward trend for more than weeks now, following the strong rebound around the psychological level of 1.0500. Since then, the euro is rising, taking out some important obstacles including the key level of 1.0850, the psychological level of 1.1000, as well as the 50-period and the 200-period SMA on both timeframes, the 1-hour and 4-hour charts.
The daily chart as well as the weekly chart shows that the bulls are under strong momentum driving the price back towards the psychological level of 1.1300. Technically, we have said that a close above the psychological level of 1.1300 would be a very bullish development for the euro, as we have not seen a daily close above that level since March. With the US ADP coming later in the day, we could expect any kind of reaction as the US employment change, including the NFP report on Friday, will determine the pair’s move and trend direction.
Bearing the above in mind, if we see a close above the key resistance level of 1.1300, then we could see a bigger retracement, following three positive weeks for the euro, prompting a more aggressive move towards the 1.1450 level. The former level is significant as it includes the 23.6% Fibonacci retracement level. However, for confirmation of the trend reversal, we will need to see a break above the key resistance level of 1.1500.
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