EUR/USD stuck in a descending triangle ahead of US Nonfarm Payrolls

EUR/USD has carved out a descending triangle pattern on the 4-hour chart ahead of the all-important US Nonfarm Payrolls report, scheduled for release at 12:30 GMT on Friday. 

A descending triangle comprises trendlines connecting lower highs and a strong support level. In EUR/USD's case, it is represented by trendlines drawn from June 10 and June 23 highs and support levels near 1.1180. 

A breakout would imply a continuation of the rally from lows near 1.0750 observed in May and open the doors for a re-test of 1.1422 (June 10 high), Meanwhile, a downside break would put the bears into the driver's seat. 

The direction of the breakout will likely be decided by the US payrolls report, which is expected to show the economy added 3,000K jobs in June following May's 2509K additions. The jobless rate, too, is forecasted to rise to  7.7% in June from 7.3% in May. Meanwhile, Average Hourly Earnings are expected to have risen by 5.3% year-on-year in June, marking a slowdown from May's increase of 6.7%. 

An above-forecast data could put a bid under the US dollar, pushing EUR/USD lower. However, losses could be short-lived, if payrolls lift stock markets, eventually forcing markets to offer US dollars. Investors have treated the greenback as a haven currency since the beginning of the coronavirus crisis in mid-May. 

The dollar, however, could rise sharply across the board if coronavirus concerns overshadow upbeat US data and keep equities in the red. The number of new infections in the U.S. topped 50,000 on Wednesday for the first time, according to Washington Post. At press time, the pair is trading at 1.1262, representing marginal gains on the day.

Technical levels