Analysis of EUR/USD ahead of the US Non Farm Payroll
In front of Draghi’s press conference on Thursday the EUR/USD spiked all the way up to 1.24 levels only to be reversed by the end of the day and close in negative territory below 1.22, when markets realised that there is no bazooka as all the ECB head came out with was a plan to plan. With the ECB and the Fed disappointing the market’s hopes for more stimulus, all eyes turn now to the US unemployment report. Today’s data are most likely to be interpreted in terms of growth rather than the outlook for Fed stimulus and even a figure below expectations could not substantially hurt the safe-haven status of the greenback. With the Euzonone debt problems nowhere near solved, the single currency looks set to continue to tumble with the EUR/USD likely to be sold on rallies. With the MACD signal line consistently below the zero line since the beginning of May and with a downtrend line capping RSI on the daily chart, then technical set up confirms the bearish outlook on the pair. At 1.2205 at the time of writing, there is plenty of room for the pair on the downside. Key support level sits at 1.1969, March 2010 lows. Given the current fundamental picture it is hard to imagine a substantial movement on the upside. Rallies up to key resistance at the 1.23 area could be a good opportunity to sell the pair.
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