The EURUSD continues to trade near the peak of a recent upswing. Once the initial volatility upsurge following the August non-farm payrolls data settles down, the price action is likely to resume with directional trading. Read more about the broader market sentiment from our comprehensive analysis of the pair.
The Bureau of Labour Statistics (BLSL) just posted the highly anticipated U.S. employment numbers for August, which represented a massive disappointment. The labour market expanded at a much slower pace than initially expected, which momentarily exacerbated the greenback's struggles in the short term.
As can be seen on the 4H chart above, the price action of the EURUSD pair continues to advance, which is underpinned by the regression channel. Following the release of the latest employment numbers, the price started probing the channel's upper boundary.
However, failure to break out above it could lead to a subsequent correction. This is probable given the waning bullish momentum underpinned by the decreasing histogram of the MACD indicator.
The first major target is underpinned by the 23.6 per cent Fibonacci retracement level at 1.18327, which was only recently crossed by the channel's lower boundary. Its significance was highlighted after the emergence of a Shooting Star candle the last time the price reached it.
A deeper target is represented by the 38.2 per cent Fibonacci retracement level at 1.17999. Its significance stems from several factors. Firstly, it is virtually indistinguishable from the psychologically significant resistance-turned-support at 1.18000.
It also served as the last swing peak during the development of the preceding downtrend. Moreover, the throwback to the 38.2 per cent Fibonacci following the completion of the aforementioned Shooting Star led to a sizable rebound from 1.17999 in the form of a Bullish Engulfing.
According to the findings of the report, the U.S. economy added 235 thousand Jobs in August, marking a sizable rebound from the upwardly revised more than a million new positions that were created a month prior.
The performance fell considerably short of the consensus forecasts, which were anticipating 720 thousand to be added in August.