The EURUSD recently retested its 2021 trend line ahead of the August 2nd non-farm payroll (NFP).
If you saw the analysis before I left for vacation, you should have been prepared for 1.0780 to serve as key support.
The euro reached a low of 1.0777 on August 1st, just before a 223-pip rally.
Also, note that EURUSD was rejected from 1.1009, a level I’ve had on my chart for months.
So, what’s likely from here?
It’s difficult to say, especially with the DXY trapped between its 2023 channel support near 102.25 and former channel support (now resistance) at 103.50.
The “easy” trade was longing EURUSD from the 1.0780 region, as mentioned in my last post.
Market conditions have become more challenging since then, with EURUSD mostly moving sideways since August 6th.
That said, you can see where 1.0900 is serving as support, and we know 1.1000 is resistance.
We also know the EURUSD trend shifted in late June, with the pair now carving slightly higher highs and lows.
With that in mind, I think it’s risky to open shorts while EURUSD holds above 1.0900 and the DXY remains below 103.50.
If that changes, shorts may be in order.
At the same time, longs are difficult to justify, given the sideways price action since August 6th.
A wait-and-see approach might be the best course of action until EURUSD and DXY reveal their intentions.
