EUR/USD Recovers Early Day Losses

EUR/USD reversed at the North American open and has wiped losses from earlier in the day. The reversal took place slightly ahead of a confluence of support and on a 4-hour chart, the pair is on pace to post a bullish engulfing candle.

The currency pair turned slightly ahead of support at 1.1922 which was resistance towards the start of the month. The horizontal level also falls within proximity of a rising trendline that originates from a low posted on July 5th.

The recent decline in the pair followed a rejection from resistance at the August high on an attempt on Friday. The somewhat loosely correlated USD/CHF pair reversed on Friday after a third failed attempt at support from the 2016 spike low. USD/CHF remains in the green for the day as of the European close but is on track to print a reversal candlestick on a 4-hour chart.

The Bureau of Labor Statistics reported JOLTS job openings at 6.17 million in July to exceed expectations of 5.96 million job openings following a revised reading of 6.12 million in the prior month. The data, however, did not have a significant impact on the exchange rate. The BLS will release producer price index figures for August on Wednesday in early North American trading, the data is expected to drive volatility to the dollar pairs.

Ahead of the US data, European quarterly employment change numbers will be released in the European session.

The US dollar index (DXY) posted a notable gain yesterday and although the index trades in the green as of the European close, today’s gain has been minimal as resistance from the 2016 spike low has come into play.

EUR/USD faces two notable hurdles, one at 1.1967 which is a level respected on a weekly chart and 1.1979 which marks the spike high posted during the US jobs report at the start of the month. A break above further resistance at the psychological 1.2000 would encourage bulls and signal a bullish continuation which is likely to accompany a pickup in upside momentum. Key support for the pair remains at the rising trendline and horizontal level confluence falling at 1.1922.

EUR/USD 4-Hour Chart

EURUSD 4H Sept 12

Jignesh is an analyst and trader, specializing in currencies and commodities. He utilizes a macro view as well as a proprietary method of pattern recognition that is based on the principles of Elliott wave. His focus is to assess strength in trends, and perceiving high potential turning points in the markets. He brings over 4 years of experience in his current role.