EUR/USD outlook: Correction needs to clear 1.1800 zone to resume; US NFP key market driver today

EUR/USD

The Euro is trading within tight range in early Friday, due to holiday-thinned volumes, following a two-day bounce from new multi-month low at 1.1704.

Fresh risk mode in the market, driven by signs that US economic recovery (boosted by President Biden’s infrastructure plan, accelerating vaccination in the US and upbeat data from the US manufacturing sector) is accelerating and should further lift the single currency.

On the other side, lockdowns across the Europe on rising number of new coronavirus cases and slow immunization process, is negative factor.

US non-farm payrolls is the key event today and results above expectations (647K f/c from 379K prior, with some analysts speculating with much higher numbers) could further boost risk sentiment and push Euro higher.

Daily studies support scenario as momentum is rising and stochastic heading north after forming bullish divergence and reversing from oversold territory.

Fresh bulls face strong barriers at 1.1800 zone (falling 10DMA / bear-trendline off Feb peak at 1.2242 / base of thick 4-hr cloud / Fibo 38.2% of 1.1988/1.1704 downleg) with firm break here to add to reversal signals and open way for further recovery.

Weekly chart shows formation of hammer candle which would support the idea of reversal.

Caution on failure to clear 1.1800 zone, as this would signal recovery stall and keep the downside vulnerable.

Res: 1.1792; 1.1805; 1.1835; 1.1858.
Sup: 1.1769; 1.1753; 1.1704; 1.1694.

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