EUR/USD is steady ahead of the NFP release, still attempting to unwind from oversold price conditions, with both momentum and net short positions holding at their extremes.
Expect a temporary relief bounce over the coming sessions into 1.2910/12 and potentially 1.3000 (psychological level). Only a sustained move at these levels would neutralize the extreme market condition.
In terms of the big picture, key structural support remains at 1.2125/30, which would equate to EUR/USD losing half of its gains from the bull market taken from the year 2000.
Inversely, the USD Index is also unwinding from overbought conditions, after rocketing above the previous 2012 peak at 81.78.
This week’s US Non-Farm Payroll will likely influence. Momentum has decelerated since early 2012 and is likely to extend into the key level at 54k (2011 low), potentially renewing safe haven flows back into the USD.