Originally published by AxiTrader
What could be more tantalising than the price of an asset or currency approaching an important technical level when there is a huge announcement in the hours ahead?
That's exactly where the EUR/USD finds itself this morning after the US dollar's rally stalled in the past 24 hours post-FOMC reaction. And it is exactly where we find the euro as traders wait for the release of the April non-farm payrolls at 8.30am New York time today (10.30pm my time tonight).
I'll get to the chart in a sec, but first the expectation.
The Reuters survey says the market is expecting 192,000 jobs and an unemployment rate of 4%. But after that wage cost data last night average earnings (0.2% mom and 2.7% yoy expected) might be the big data point to watch.
But so too might this trendline of the recent decline from around 1.24 back on the 19th of April.
It currently sits at 1.2012 on the 4 hour charts and the setup is there for a strong pulse topside if that level breaks and if the post FOMC high of 1.2025 is taken out.
Now if we scale out a time frame to the daily charts we see the downtrend has been extremely sharp and the consolidation of the past day could simply be a reaction to price getting ahead of itself - in terms of trading through the bottom of the Bollinger Band for the two days preceding yesterday's rally in the euro.
And certainly the weekly charts suggest that the trend for the euro is still lower.
But the set-up on shorter time frames suggests if the trendline breaks and takes out Wednesday's highs euro could rally back to the 38.2% of the sell off around 1.2114.
Have a great day's trading.