EURUSD started June with a 100-pip rally after a volatile end to May.
Given the selloff we saw last month, a retracement in early June was to be expected, although I did think a 1.0600 retest might come first.
So what should we watch ahead of Friday’s non-farm payroll (NFP)?
The first level I’m watching is 1.0760, as the euro didn’t give us a convincing break on Thursday, leaving it intact as resistance.
We saw something similar from the US Dollar Index (DXY) in relation to the 103.50 yearly open I’ve discussed at length.
So as of now, the dollar is still above critical support, and the EURUSD is below resistance.
But instead of expecting a reversal immediately from these levels, Friday’s NFP volatility could produce a few long wicks to trade next week.
For EURUSD, I’ll be watching to see if we get a 1.0830 retest as resistance.
That alone could offer a favorable selling opportunity, especially if we get a bearish pin bar.
I’m still eyeing a potential 1.0600 retest later this month, so I’ll watch for weakness during this relief rally to short the EURUSD.
But I’m not in a hurry, and I’d like to see some stops run above 1.0760 first.
With that said, I’ll only feel comfortable being bearish on the EURUSD if the DXY holds above 103.50 on Friday.
If it doesn’t, we could see a deeper pullback from the dollar next week, which means a higher EURUSD.
In summary, I’m watching to see if we get a long lower wick on the DXY on Friday and a long upper wick for EURUSD to trade next week.
