EUR/USD Analysis: Anticipating Breakout Amidst Supply Zones

Last Friday, EUR/USD reached its highest level since early January, climbing above 1.0983 before reversing course during the American session to close the day with minor losses. As Monday's morning session unfolds, the price action is characterized by an Inside bar pattern on the H4 timeframe, indicating a period of consolidation as traders await a breakout in either direction. Notably, the price has approached two significant supply areas (highlighted in red rectangles), prompting traders to anticipate a possible retracement.

In anticipation of potential market movements, we have set a sell limit at the 1.1000 area in case of a false breakout, aiming to take profit above the inside bar range before a potential drop. Our ultimate take profit target stands at 1.0700.

Friday's data from the US revealed that Nonfarm Payrolls (NFP) surged by 275,000 in February, surpassing market expectations of 200,000. However, this robust reading failed to bolster the USD. The Bureau of Labor Statistics (BLS) revised January's increase downward to 229,000 from 353,000, while the annual wage inflation, as measured by the change in Average Hourly Earnings, dipped to 4.3% from 4.4% in January. Additionally, the Unemployment Rate rose to 3.9% from 3.7%, while the Labor Force Participation remained steady at 62.5%.

The benchmark 10-year US Treasury bond yield declined towards 4% after the release of the February jobs report, contributing to the continued weakness of the US Dollar against its counterparts. However, profit-taking activities ahead of the weekend provided some support to the currency.

With no high-impact macroeconomic data releases scheduled for Monday, investors are likely to closely monitor risk perception indicators to gauge market sentiment.

In light of these developments, we anticipate a retracement in EUR/USD as traders assess the broader market dynamics and position themselves accordingly.

Trade active:

Trade active:

✅ STILL VALID