EUR/USD has not been moving much for the week so far, trading circa 1.3030, just a tiny +0.21% from the previous weekly close Friday, after a bounce off Monday's weekly low at 1.2978. The pair remains limited below key 50% Fibo retrace of Friday's steep fall following the best NFP figure in 12 months, taking the unemployment rate to its lowest in 4 years.
Lack of key risk events for the day ahead runs the risk of keeping the pair mostly unchanged until Wednesday's U.S. retail sales data, which will likely add volatility to markets. The only potential risk event will be Greece's Prime Minister Samaras talks with the troika today, who needs to lay out further austerity details to get approval of the next € 2.8 bln tranche of the bailout.
Looking at the health of the USD, the currency has initiated a retracement from multi-month highs above the 82.8 level in the USD index, last at 82.52. At the same time, the U.S. 10 year note yields printed another 11-month high at 2.08% on Friday following the NFP, as anticipation to an end of the Fed's QE garners attention.
Back to the EUR/USD, from a technical stance, "the 61.8% retracement of the same rally is now around 1.3070 and immediate resistance," says Valeria Bednarik, Chief Analyst at Fxstreet.com.
The analyst sees technical readings neutral, "yet if price manages to advance above mentioned resistance, the pair may gain momentum and extend towards 1.3120 price zone, where a daily descendant trend line should halt the run" she adds.
For CMT and FXstreet.com Independent Analyst Fan Yang: "The overall bearish bias remains," suggesting "a rally above 1.3075 would be needed to neutralize EUR/USD's bearish outlook."
"A break above 1.3160 would be needed to form a bottom to suggest a bullish correction scenario. Otherwise, the next possible support is in the 1.2875-1.2885 fibonacci confluence area. 50% of 1.2041-1.3710, and 78.6% of 1.2659-1.3710," he reckons.
According to latest COT data, commercial traders turned into net long holders again for the first time since mid December when EUR/USD was climbing to 1.32s level, and started to net shorting the common currency until they reached a net record short position by mid February, after the pair peaked at 14-month highs of 1.3711. EUR/USD is down -1.36% so far for the year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.