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  • The EUR/USD has failed twice in the last 14 hours to cut through the 50-hour exponential moving average (EMA).
  • The treasury sell-off could gather more steam, sending the EUR/USD lower if the US wage growth numbers beat estimates by a big margin.

For the EUR/USD traders, the 50-hour exponential moving average (EMA), currently located at 1.1518, is a key level to watch out for in Europe.

This is because the recovery from the low of 1.1463 hit yesterday seems to have run out of steam around the EMA. That argument has merit as the pair has failed twice in the last 14 hours to cross the 50-hour EMA in a convincing manner.

The rejection at the 50-hour EMA may prove costly in Europe if the treasury yields resume the rally, although caution ahead of the US non-farm payrolls and wage growth release could keep the 10-year flatlined. At press time, the 10-year US Treasury yield is trading at 3.19 percent, having clocked a high of 3.23 percent yesterday.

Later today, the EUR/USD may print fresh 1.5-month lows below 1.1463 if the US wage growth number blows past expectations, lifting the 10-year yield above the previous day’s high of 3.23 percent. It is worth noting that the bar of expectations has been set high and the doji candle on the 10-year treasury yield’s daily chart is reporting indecision or bullish exhaustion.

As a result, anything less than 0.3 percent and 185K, the official economists’ expectation for average weekly earnings and non-farm payrolls, respectively, could trigger a sharp drop in the yields and the US dollar.

EUR/USD Technical Levels

Resistance: 1.1518 (50-hour EMA), 1.1543 (previous day’s high), 1.1594 (resistance on the hourly chart)

Support: 1.1493 (recent higher low on the hourly chart), 1.1463 (previous day’s low), 1.1422 (76.4% Fib R of 1.1301/1.1815)