On the daily chart below, we can see that the sellers defended the 1.07 resistance and leant on the red long period moving average. The big selloff was caused by Fed Chair Powell’s comments regarding the possibility of a 50 bps hike at the March meeting and the willing to go above the projected terminal rate in December 2022. The market interpreted this as a more hawkish stance and the USD rallied across the board.
The downtrend for the EUR/USD pair is still intact and the sellers are now eyeing the breakout of the 1.05 handle to target the next support at 1.02. Everything will come down to the NFP report tomorrow where a beat should lead to a breakout and a bigger selloff and a miss should give the buyers again some control.
On the 4 hour chart below, we can see that the selloff after Powell led also to a breakout of the trendline before finding support at the 1.0533 level. The price is now consolidating just below the neckline at 1.0576 of the double top. Generally, once the neckline is broken, the target is the measured move from the high to the neckline projected to the downside, so in this case it would be 1.0457, but we will need a strong NFP report to get there.
On the 1 hour chart below, we can see that the sellers started to pile in when the violet trendline gave way in anticipation of the double top working out. Powell’s comments just happened to increase the momentum a lot and led to the breakout of both the blue trendline and the neckline.
Now, the sellers should be defending the resistance zone at 1.0576 where we can also find the 38.2% Fibonacci retracement level. This little range created between 1.0533 and 1.0576 will define the next move based on the NFP data. Break above on a miss and the buyers will be in control. Break below on a beat and the sellers will lead the way.
