EUR/USD Mid-Session Technical Analysis for May 3, 2019

The Euro is trading lower on Friday shortly before the release of the U.S. Non-Farm Payrolls report at 12:30 GMT. The pressure is coming from rising U.S. Treasury yields, which are making the U.S. Dollar a more desirable asset. The divergence between the monetary policies of the U.S. Federal Reserve and the European Central Bank is also contributing to the weakness.

At 11:07 GMT, the EUR/USD is trading 1.1152, down 0.0020 or -0.18%.

As far as the U.S. is concerned, the dollar is set to end the week with a bullish tone as traders reduced bets on a Federal Reserve rate cut later in the year, while some speculated that payrolls would beat the 180K forecast. The Euro, on the other hand, is still feeling the negative effects of yesterday’s weak Euro Zone manufacturing surveys.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1112 will reaffirm the downtrend. A move through 1.1265 will change the main trend to up.

After finding resistance earlier in the week slightly above the short-term retracement zone at 1.1218 to 1.1243, the EUR/USD is now trading on the weakside of a long-term Fibonacci level at 1.1185. This zone is new resistance.

Daily Technical Forecast

Based on the earlier price action and the current price at 1.1152, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at 1.1162.

Bearish Scenario

A sustained move under 1.1162 will indicate the presence of sellers. If this move creates enough downside momentum, then look for the selling to continue into the next uptrending Gann angle at 1.1137.

We could see a technical bounce on the first test of 1.1137, but if it fails the selling will extend into the next uptrending Gann angle at 1.1125. This is the last potential support angle before the 1.1112 main bottom. The bottom is the trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 1.1162 will signal the return of buyers. This could drive the EUR/USD into a resistance cluster at 1.1185. Since the main trend is down, sellers are likely to come in on a test of this area. Overtaking 1.1185 could trigger a strong short-covering rally.

Watch for a wicked two-sided trade following the release of the NFP report because it has multiple components. One could be bullish, the other bearish. For example, payrolls could come in north of 200K, but average hourly earnings could come in weaker, or vice-versa.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.