EUR/USD is trading inside a symmetrical triangle on its 4-hour time frame as traders can’t quite establish a clear direction on the pair. Price is testing the top of the triangle around the 1.3875 levels but stochastic is reflecting selling pressure.
A selloff from its current levels could take the pair back to the bottom of the triangle at the 1.3775 area. Consolidation around the current levels could be seen for the most part of the day as traders await the results of the non-farm payrolls report for April.
Recall that the US dollar reacts to fundamentals during this release, as a strong jobs figure tends to support the currency while a weak reading leads to a selloff. The past report has printed a bleak result but there could be a stronger showing this time around. The consensus is at a 216K rise in employment, which could push the jobless rate down to 6.6% from 6.7%.
In this case, EUR/USD might selloff to the bottom of the triangle and an even stronger figure could lead to a breakdown. Take note that the chart pattern is roughly 300 pips in height, which suggests that the resulting selloff could be of the same size.
By Kate Curtis from Trader’s Way