The euro has broken above a key short-term resistance, suggesting a base is in place around 1.1950, but it is too soon to expect the single currency to reach a new trend high above 1.2350.
The break above 1.2100-05, where the 21-day moving average converges with the 38.2 Fibonacci retracement of the 1.2349-1.1952 decline, signals the end of the downtrend that began in early January and suggests a short-term bottom has formed around 1.1950.
But the mere 1.33% rise from the 1.1952 low has been orderly and not impulsive, suggesting the market is still long.
Friday's weaker-than-expected U.S.
non-farm payroll data nL1N2KA34D was the catalyst for the turn higher in the EUR/USD, as it undermined the narrative the U.S. economy was streaking ahead of the euro zone, which is struggling to roll out the coronavirus vaccine nS8N2JU01F.
EUR/USD bulls have taken control for the time-being, based on the view the global reflation trade will send the greenback broadly lower.
This view may prove correct, but if upcoming EZ data is sluggish and vaccine rollout delays continue, the euro may struggle from here.
EUR/USD needs to break above the 61.8 Fibonacci retracement of the 1.2349-1.1952 move around 1.2200 to maintain momentum to target a new trend high above 1.2350.
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