The EUR/USD has been stabilizing since Tuesday after returning to key support at $1.20. Forex traders have been cautious since the beginning of the week, with the major currencies moving without much of a trend while waiting for the monthly US jobs report, the so-called NFP.
A higher than expected reading would reinforce fears that the US economy is overheating and therefore the need for an interest rate hike, which would obviously be a very positive factor for the dollar, but negative for the equity markets, especially techs.
Conversely, a lower than expected reading should reduce fears of overheating, inflation, and therefore the need to normalize monetary policy.
A pullback below 1.20 would pave the way for a new down leg that could develop to the theoretical target of the chartist figure at 1.20.
While waiting for the NFP on Friday, the Euro received a slight boost from retail sales rising more than expected in March in the Eurozone (+2.7% compared to February). Consumers in the region are continuing to buy despite the current restraint measures which would be one of the very direct consequences of an excess of savings for 14 months.