- The EUR/USD cleared a key falling trendline hurdle yesterday, opening doors for a stronger corrective rally.
- The upside could gather momentum if the US data shows wage growth cooled sharply in October.
- Nonfarm payrolls probably rebounded by 190,000 jobs in October and average hourly earning likely increased by 0.2 percent on the month.
The EUR/USD pair moved above 1.14 yesterday as expected, confirming an upside break of the trendline connecting the Oct. 16 high and Oct. 22 high.
The upside break of the diagonal resistance has opened the doors to a stronger recovery rally toward the next resistance of 1.1463 (Oct. 4 low).
The bullish technical setup could play out if the US monthly wage growth figure, scheduled for release at 12:30 GMT, misses estimates by a big margin, forcing markets to scale back expectations of Fed tightening. A below forecast non-farm payrolls reading could also weigh over the US dollar.
The US dollar, however, will likely pick up a strong bid if the US data highlights a pick-up in wage-price inflation, adding credence to the Fed's view that interest rate policy would have to turn restrictive for some time.
As of writing, the spot is trading just below 1.13.
EUR/USD Technical Levels
Resistance: 1.1432 (Oct. 9 low), 1.1463 (Oct. 4 low), 1.15 (psychological hurdle)
Support: 1.1397 (200-hour moving average), 1.1374 (50-hour + 100-hour moving average), 1.1336 (support of Oct. 26 low on the hourly chart).