Markets Digest US Payrolls and Awaits MPC Outcome

EUR/USD Finds 1.2100, 1.2035 Fib Support
 
We saw generally quiet price action overnight as the strong payroll numbers and the first of a two -ay MPC meeting are digested by the markets. EUR/JPY was firmly bid from the open driving USD/JPY towards the daily downtrend resistance line beginning Dec 05 and keeping EUR/USD above 1.2100.

We are looking for USD/JPY failure at 118.50 as EUR/JPY remains bid. This should keep EUR/USD above 1.2100 Fib and trendline support. .618 and .786 Ret of different swing point lows find uptrend support at 1.2095. I am long half of a EUR/USD position looking to put the other on after a break of the minor 10-minute downtrend channel shown in the inset chart. Stops can be tight as we are doing a bit of light bottom picking here.

However, if EUR/USD does not hold the first level of Fib zone support at 1.2095, a zone just as strong resides 60 points lower at 1.2035. If we are stopped on the first half of the long position at 1.2105 as the market makes a run towards 1.2085, look to sell a retest towards 1.2100 with stops above the 10-minute chart swing high targeting the 1.2035 zone. DXC should find resistance at 89.80 should protect your short EURUSD position accordingly.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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