The euro currency received a minor boost against the US dollar on the currency market last week, following a renewal of risk-on sentiment and bears failure to break critical monthly technical support, around the 1.1700 level.
This week could be critical for the EURUSD pair after last week’s blockbuster Non-farm payrolls jobs report the United States economy. The true market reaction to the solid US jobs number is likely to be after the Easter holiday period.
Razors think market conditions last Friday meant the EURUSD pair was contained in an extremely narrow price range, even after the March payrolls jobs number nearly doubled market participants expectations.
Key risk events for the EURUSD pair this week include the FOMC meeting minutes, a key speech from Federal Reserve Chairman Jerome Powell, and an important IMF meeting. It will be particularly interesting to see how Chair Powell communicates to the market after the recent series of superb US data points.
On the technical front, the EURUSD closed the weekly under its 200-day moving average for the second consecutive week, which really underscores the lack of optimism and buying interest towards the pair right now.
Upside risks do remain, especially with risk sentiment being elevated. Bullish MACD price divergence has also formed on the lower times and is warning of a potential recovery back above the 1.1800 level at some stage.
Something else which is also aligning with the notion of a possible upside correction in the EURUSD pair is sentiment. The ActivTrader platform Market Sentiment tool shows that sentiment has neutralized, following a previous bullish bias amongst EURUSD traders during the multi-week bearish down move.
Neutral sentiment usually signals the start of range bound trading conditions; therefore it is within the realms of possibility that a period of range trading between the 1.1700 and 1.1890 area could be about to take place.
EURUSD Short-Term Technical Analysis
Traders do need to exercise some caution in the short-term if they are bearish towards the EURUSD pair. The lack of appetite below the 1.1700 level last week potentially signalled near-term exhaustion in the bearish trend.
Additionally, the MACD indicator has bullish MACD price divergence extending towards the 1.1840 region this week. Until the 1.1700 level is officially broken, it is certainly possible that bullish price divergence may need to be reversed.
EURUSD Medium-Term Technical Analysis
Looking at the daily time chart the EURUSD pair bounced from a key down slopping trendline last week. The trendline in question is denoted by attaching the September 2020 trading high to the November 9th trading high.
A solid bounce has happened from the trendline, the big question is whether the move will be a minor corrective move or the start of something more substantial.
The EURUSD pair remains technically bearish below its 200-day moving average, so selling close this key metric or playing a bullish breakout above may be the most attractive medium-term strategies right now.