The EUR/USD pair surged with bullish momentum during Wednesday's session, propelled by a robust bullish impulse. However, the price has now entered a potential reversal zone, characterized by a Double top formation on the H1 timeframe. Additionally, on the H4 chart, the price has reached the 61.8% Fibonacci level, accompanied by overbought conditions and divergence in the RSI indicator. Traders may consider mitigating their positions with a reversal to the Point of Control (POC) volume value, or alternatively, opt to sell their positions.
The downtick in the ISM Services Purchasing Managers' Index (PMI) data from the US instigated a selloff in the US Dollar (USD) during Wednesday's American session. The PMI headline figure declined to 51.4 from 52.6, indicating a slowdown in the growth of activity within the service sector. Moreover, the Prices Paid Index fell to 53.4 from 58.6, signaling a softening in input inflation within the sector.
Despite these developments, Federal Reserve (Fed) Chairman Jerome Powell reiterated that the central bank is not hastening to lower the policy rate. Powell emphasized the importance of letting incoming data guide their policy decisions, indicating a patient approach.
The upcoming release of the Nonfarm Payrolls data by the US Bureau of Labor Statistics on Friday adds further uncertainty to the market. As traders await this crucial jobs report, market participants may adopt a cautious stance, potentially influencing trading activity.
In light of these factors, we anticipate a reversal in the EUR/USD pair, with market sentiment likely to shift amidst the release of key economic data.
That's interesting, I noticed you used the Fibonacci retracement to line up with the resistance zone. Good kind of confluence. Let's see how this works out. Will be keeping an eye on it