EUR/USD Price Analysis: The pair pauses at 1.18 after some recent USD strength

EUR/USD 4-hour chart

EUR/USD has bounced back from the session low to trade around 45 pips from the low point of the day. There has been lots of data but the risk theme seems to suggest that traders and investors are worried about the US government fiscal deal. Trump could come out at any moment and suggest a deal is in the works as he doesn't like to see the stock markets fall. There was also lots of data on Thursday and the initial jobless claims narrowly missed analyst expectations.  The US Markit Services PMI for August printed at 55.0 vs the expected 54.7 but this did not do much to change the risk tone. Lastly, the market will be focusing on tomorrow non-farm payroll print the latest analyst consensus is for 1.4 million jobs to be added. 

Looking at the chart, the orange line is the key support. The level represents the consolidation low and a break of the zone could suggest more weakness is to come. The green line near 1.18 is where the price bounced today. Now there has been some support at that level the red resistance zone just under 1.19 could be important. A break above 1.19 could mean the recent uptrend is back on. Lastly, the black trendline connecting the lows of the consolidation point is also one to watch. A break could suggest further weakness may be on the horizon. 

The indicators are looking very bearish at the moment the MACD histogram is red and the signal lines have just dipped below the midpoint. The Relative Strength Index is very close to the oversold area but interestingly the price has made a higher low and the indicator has made a lower low wave. This is called a bullish failure swing and could mean the price might take a breather and move back up.

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